Source : INDIA TODAY NEWS
Gold and silver are back in the spotlight, and this time the rally is being driven by more than just investor demand for safe-haven assets. Falling US Treasury yields, a weaker dollar and fresh geopolitical tensions are giving precious metals another push higher.
At 12:50 pm on Friday, MCX gold was trading at Rs 1,60,815 per 10 grams, up 0.87%, while MCX silver was at Rs 2,45,456 per kg, gaining 0.91%.
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Precious metals have also had a strong week. According to Dr Renisha Chainani, Chief Research Officer (CRO) at Augmont, gold and silver have gained more than 5% this week.
WHY ARE GOLD AND SILVER PRICES RISING?
One of the biggest triggers has been the latest move by the US Treasury.
The Treasury has announced plans to at least double its long-term debt buybacks in the coming quarter. The move is aimed at helping contain borrowing costs and has pushed US Treasury yields lower.
A fall in US bond yields tends to support gold because investors earn less from interest-bearing assets. At the same time, a weaker US dollar makes dollar-priced gold more affordable for buyers using other currencies.
“Precious metals have jumped more than 5% this week after the US Treasury Department announced plans to at least double its long-term debt buybacks in an effort to contain borrowing costs, driving Treasury yields and the dollar sharply lower,” said Chainani.
The move has therefore created a favourable backdrop for both gold and silver.
IRAN TENSIONS ADD ANOTHER LAYER OF SUPPORT
Geopolitical tensions are also keeping investors cautious.
Oil prices have extended their gains as the US prepares sweeping new economic sanctions against Iran. The two sides remain locked in a standoff over the Strait of Hormuz, one of the world’s most important routes for global oil shipments.
US Treasury Secretary Scott Bessent has said the US would impose what he described as the “toughest sanctions in history” on Iran.
For financial markets, any escalation around the Strait of Hormuz could have wider consequences, particularly for energy prices and inflation. This uncertainty can also push investors towards assets such as gold, which is traditionally viewed as a safe haven.
US TREASURY BUYBACKS REMAIN A KEY MARKET SIGNAL
The US Treasury’s debt-buyback plan is another factor that investors will be watching closely.
The Treasury said it would double the size of buybacks of longer-dated securities over the next quarter to at least $4 billion per operation. Bessent has also indicated that the government could increase Treasury repurchases further.
The expectation of additional buying has helped push bond yields lower, which in turn has supported precious metals.
“Bessent said he may further increase the government’s repurchases of Treasuries,” Chainani noted.
For gold investors, the direction of US yields and the dollar will therefore remain important in the coming weeks.
IS THIS THE RIGHT TIME TO BUY GOLD AND SILVER?
The big question for investors after a sharp rally is whether to buy now or wait for a correction.
The answer depends largely on the purpose of the investment.
For someone looking at gold as a long-term portfolio diversifier or hedge against uncertainty, a single day’s price movement should not be the deciding factor. Gold can make sense as part of a diversified portfolio, but investors do not necessarily need to put all their money in at once.
After a gain of more than 5% in a week, however, chasing the rally can be risky, particularly for short-term investors. A sharp rise can be followed by profit-taking or a temporary correction.
For silver, the risk can be higher because prices tend to be more volatile than gold. Investors considering silver should therefore be prepared for larger price swings.
SHOULD INVESTORS WAIT FOR A CORRECTION?
For those who are not in a hurry, staggered buying may be a more comfortable approach than investing a large amount after a sharp weekly rally.
Investors can divide the amount they want to invest into smaller portions and buy over time. This reduces the risk of committing the entire amount at a single price.
The broader factors currently supporting precious metals — lower US yields, a softer dollar and geopolitical uncertainty — could continue to provide support. But markets can change quickly, particularly when prices have already moved sharply.
The key takeaway is that gold and silver may still have a supportive backdrop, but that does not automatically mean investors should chase the rally.
For long-term investors, gradual buying can help manage timing risk. For short-term investors, waiting for prices to cool after such a strong run may offer a better entry point.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
– Ends
SOURCE :- TIMES OF INDIA
