New Delhi: The effect of persistent inflation in America and the fear of the Federal Reserve increasing interest rates is visible on the prices of gold and silver. In the international market, gold has fallen to around 3,880 dollars an ounce. Its price had fallen by about 3 percent in the last trading session. With this fall, gold reached its lowest level in 13 months.
A big fall was recorded in the prices of gold and silver in the domestic market also. On MCX on Thursday night, gold closed at around Rs 1.36 lakh per 10 grams, while the price of silver stood at Rs 178,848 per kg. In the bullion market, gold became cheaper by about Rs 3,000 and reached Rs 137,692 per 10 grams. At the same time, the price of silver fell by Rs 4,860 and closed at Rs 181,040 per kg.
Why did inflation spoil the game of gold in America?
The biggest reason for the fall in gold prices is higher-than-expected inflation figures in America. Due to this, investors fear that the US Federal Reserve may further increase interest rates to control inflation. This apprehension also affected American bond yields. On Thursday, the yields of some US Treasury bonds increased by more than 12 basis points.
Will the Federal Reserve raise interest rates next month?
Recent statements from Federal Reserve officials have also strengthened the fear of increasing interest rates. Chicago Fed Chairman Austin Goolsby and San Francisco Fed President Mary Daly have stressed the need to control inflation.
Now the market is expecting the interest rates to be increased by 0.25 percent in the Fed meeting to be held next month. Some investors are also predicting an increase of 0.50 percent. Rising interest rates can lead to better returns on investment options like bonds. In such a situation, investors can stay away from gold, because there is no interest on investment in gold.
Oil prices rise due to tension with Iran?
The increasing tension between America and Iran has also increased market concerns. After the statement of US President Donald Trump, the price of Brent crude reached around 96 dollars per barrel. There is a possibility of increase in inflation at global level due to increase in cost of crude oil. This may increase the pressure on central banks to keep interest rates high, which is impacting gold prices.
Slight rise in gold and silver returns on Friday
After continuous decline, a slight recovery was seen in the prices of gold and silver in the international market on Friday. Spot gold rose 0.1 percent to 3,881.02 dollars an ounce in early trade. At the same time, silver was also trading at 50.11 dollars an ounce with an increase of 0.2 percent.
