Silver Price Today – Trade War Escalates: How Gold and Silver Are Responding to Geopolitical Risk
Silver Price Today – Gold prices saw a significant decline on Monday, dropping more than 1% to trade below the critical $3,000 mark. However, the price has since recovered slightly, trading around $3,023 as of the latest update, reflecting a 0.37% decrease from Friday’s closing price. Despite this short-term dip, the gold price has increased by 28% over the last 12 months. In India, the current price of gold stands at Rs 90,380 per 10 grams.
The initial dip in gold prices is believed to be linked to investors liquidating positions to secure profits or to cover margin calls on other falling asset valuations. This was particularly driven by growing concerns surrounding a potential global trade war, which has put pressure on both traditional financial markets and the cryptocurrency space.
Market Dynamics and the Role of Safe-Haven Assets
The sharp fall in gold prices came after the metal reached an all-time high of $3,167.84 last week, driven by a surge in safe-haven inflows following President Trump’s aggressive tariff announcements. Initially, the price surged to a new record of $3,200 per ounce, but the subsequent two days saw a sharp correction, with prices falling back below the $3,000 level. This volatility reflects the classic pattern of risk aversion when market players often liquidate gold holdings to compensate for losses in other areas.
Gold Price Recovery and Potential for Long-Term Gains
Gold frequently experiences initial pressure during times of heightened market uncertainty, only to recover its losses in the longer term. Dr. Renisha Chainani, Head of Research at Augmont, states, “Gold has historically bounced back quickly after such dips, and we might see the same trend this time.” As geopolitical tensions continue to influence global financial markets, gold’s safe-haven appeal remains intact, which could help drive its recovery.
Global Equities Plunge Amid Trade War Fears
The broader market also faced a sharp decline on Monday, with global equities struggling to recover. Nasdaq futures were down by over 5%, while the Dow Jones lost more than 1,300 points. The Nikkei also fell by over 8% at the open. This market rout is largely attributed to the White House’s lack of response regarding escalating tariffs and its steadfast stance on aggressive trade policies.
As President Trump’s 10% import tax on Chinese goods comes into effect, with the possibility of steeper tariffs later in the week, market sentiment has soured further. Experts are growing concerned about the impact of these trade tensions on the global economy, with the fear of a potential recession looming large.
Federal Reserve’s Caution Fuels Market Uncertainty
Adding to the turmoil, Federal Reserve Chairman Jerome Powell has raised concerns about the inflationary effects of tariffs and the potential for slower economic growth. Powell’s remarks have only added to the anxiety, highlighting the uncertain future facing global policymakers. The economic outlook remains challenging, with many analysts predicting that the U.S. could face a recession in the near term.
Tailwinds for Gold Prices as Recession Fears Grow
Despite the current volatility, several key factors could propel gold prices higher. Mohamed El-Erian, Chief Economic Advisor at Allianz, warned that aggressive trade policies and sluggish GDP growth have increased the likelihood of a U.S. recession to 50%. He also pointed out that the core PCE (personal consumption expenditures), the Fed’s preferred inflation indicator, posted its largest monthly increase in over a year, indicating that inflation expectations are rising.
If inflation continues to rise, combined with slower economic growth, gold could benefit from these macroeconomic shifts. As the Fed remains cautious in its monetary policy, the gold market could experience renewed interest, especially as inflationary pressures continue to mount.
Silver Shows Resilience After Initial Drop
In addition to gold, silver has shown signs of recovery after a significant dip last week. Trading at around $30 per ounce, silver saw a 1.6% increase on Monday and is up by 7% over the past year. In India, the price of 1 kg of silver is now Rs 85,570.
Last week, silver dropped below $30 per ounce, its lowest level since January 14th, as trade war concerns weighed on its price. However, analysts believe that the worst may be over for silver, and it is likely to stabilize around the $30 mark for the time being. Dr. Chainani believes that silver will benefit from a demand-supply imbalance, which could help keep prices steady.
Geopolitical Tensions and Safe-Haven Flows Continue to Drive Gold’s Price
If geopolitical tensions persist and the U.S. trade war with its global partners escalates further, gold is likely to continue gaining from safe-haven flows. Investors are expected to flock to gold as a protective asset in times of uncertainty, driving its price upward. However, volatility is expected to persist in the short term, and gold’s price could fluctuate depending on market sentiment and broader geopolitical developments.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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