Prices of gold and silver in India have fallen to a four months low in spite of the geopolitical tension that is occurring due to the United States and Iran conflict. According to market analysts, the sudden fall is as a result of a margin call atmosphere, most investors are dumping profitable gold reserves to balance their equity losses in the face of widespread financial turbulence.
The traditional view of gold as a safe-haven asset in uncertain times has been overturned by the pressure of selling as investors demand liquidity. It is a trend that is indicative of a change in short run market behaviour where immediate financial commitments are being overridden by long run hedging policies.
In New Delhi, gold and silver were quoted at about 22 carat at about 1,25,467 and 2,300 per 10 grams respectively. On the same note, the gold prices in Mumbai were registered at 1, 25,592 per 10 grams, and the price of silver had not gone down, but was quoted at 2,300 per 10 grams.
Analysts observe that although gold prices are usually driven up by the geopolitical tensions, the prevailing market is currently driven up by the global financial burden and investors behaviour. The current war has seen the major classes of assets suffering volatility and investors are forced to rebalance their portfolio.
Although it is at the moment in its dip, analysts are of the view that because of the current rise in geopolitical risks, or because equity markets somehow keep on undermining, then gold has the possibility of returning to its upward trend. In the meantime, though, the precious metals market has been under pressure as investors have to operate in the uncertain economic conditions.