Gold Price: Why are rates not rising despite Middle East war? Know reasons here

New Delhi: Despite the ongoing Middle East conflict, gold prices have not witnessed any significant volatility. In fact, gold prices have trended downward over the past few days. Why, then, are both the stock market and gold witnessing a decline? Is the war having no impact whatsoever on gold prices? Let's find out...

Is There a Marginal Rise in Gold Prices?

Yesterday, on Friday evening, the price of gold in the bullion market stood at ₹158,399 per 10 grams. The conflict between Iran and the US began on February 28. Prior to that—on February 27—the price of gold was ₹159,097. This indicates that, during this period, only a marginal upward trend has been observed.

Why Are Prices Not Rising?

Since the onset of the conflict, gold has been trading within a specific range. In the international market, it is trading within a range of $300 per ounce. Meanwhile, on the MCX futures exchange, it is trading within a range of ₹10,000 per 10 grams.

The potential closure of the Strait of Hormuz has triggered a meteoric surge in crude oil prices. The price of WTI crude oil soared from $60 per barrel to reach $110 per barrel. Consequently, the threat of rising inflation looms large across the globe. Furthermore, investors worldwide are currently turning toward the "Dollar" as a safe-haven asset. The Dollar has, in fact, strengthened over the past few weeks. This is precisely why gold prices have not witnessed any significant upward momentum.

Where Could Gold Prices Head From Here?

The trajectory of gold prices will depend largely on market sentiment and prevailing circumstances. According to a report by Moneycontrol, if a sell-off ensues, gold prices could drop by anywhere between 5% and 20%. However, if the environment is characterized by strong US economic growth, rising inflation, and higher interest rates, gold prices would likely face adverse pressure. Conversely, if global economic recessionary trends and geopolitical tensions escalate, gold prices could witness a sharp upward surge. In such a scenario, gold prices could rise by 15 to 20 percent from current levels by the end of this year.