Mumbai: Geopolitical worries, a higher probability of a rate drop in the US, higher demands for these metals from some of the rapidly growing industries like semiconductors, electric vehicles, and solar power, and expectations of increased demand from China have all contributed to the worldwide surge in metal prices.
Silver passed $90 per ounce (Oz) on the global market on Wednesday, while gold passed $4,600 per ounce.
Silver Hits Rs3 Lakh per Kg, Gold Nears Rs1.5 Lakh per 10 Grams
Silver prices in local spot markets above Rs 3 lakh/kg due to the rub-off effect and the recent weakening of the rupee, while futures contracts for March delivery were trading above Rs 2.9 lakh/kg on the MCX. While futures contracts for February delivery were trading at about Rs 1.44 lakh/10gm on the MCX, gold prices in the local spot markets were close to Rs 1.5 lakh/10gms. Prices were at all-time highs both locally and globally.
According to news reports, in addition to the strong increase in the prices of the two valuable metals, copper and tin prices also reached all-time highs on global markets. Top Danish and Greenland officials were to meet with US Vice President J. D. Vance throughout the day, while Iran vowed to attack US military installations in Asia if Washington became involved in the demonstrations in the Islamic country.
According to accounts, both events exacerbated the already difficult geopolitical conditions worldwide.
In the words of Renisha Chainani, Head Research at Augmont, a precious metals dealer and advisory firm, “geopolitical risks continue to grow, with the US stepping up its involvement in Venezuela, President Donald Trump warning of possible military action amid unrest in Iran, ongoing conflict in Ukraine, tensions between China and Japan, and renewed insistence by the White House on acquiring Greenland.”
The continued conflict between the Federal Reserve and the US Department of Justice increased the likelihood of a rate decrease in the US, which contributed to the confidence around metals. Since a great deal of metals are priced in dollars, a rate drop in the US often causes the dollar to weaken and become less valuable in relation to other major currencies, which in turn makes metals more affordable for buyers in those other major currencies. Prices rise as a result of increased demand for such metals.
As global miners and smelters struggle to meet demand, base metals, apart from precious metals, have generally benefitted from anticipation of a tighter supply this year, according to a Bloomberg analysis. According to the report, tin shipments from Indonesia, the second-largest supplier, were hampered, aluminum faced limitations in China, the world’s largest producer, and the copper market had many significant interruptions last year.
Read more: Top Business Magazine
