Gold and silver prices surged to record highs this week, sending ripples across global commodity markets and sparking renewed interest from retail and institutional investors alike. Analysts say a confluence of macroeconomic, geopolitical, and technical factors are behind the unprecedented rally in these traditional safe-haven assets.
The first driver cited by market watchers is heightened geopolitical uncertainty. Escalating tensions in multiple regions have fueled demand for metals that typically appreciate during crises.
Second, persistently high inflation in major economies has eroded confidence in fiat currencies. Despite central banks maintaining aggressive interest rates, consumer prices continue to outpace expectations. Precious metals, which historically retain value when inflation bites, are attracting capital that might otherwise sit in cash or bonds, as per market watchers.
A third factor, according to market watchers, is the weakening US dollar. Since metals like gold and silver are priced in dollars, a softer greenback makes them cheaper for holders of other currencies. Over the past month, the dollar index has slid to multi-month lows, amplifying appetite for precious metals across Asia and Europe.
The fourth reason lies in shifting investment flows. Exchange-traded funds (ETFs) backing gold and silver have reported strong inflows as hedge funds and sovereign wealth funds rebalance portfolios toward defensive assets. Data from industry trackers shows record daily purchases of metal-linked ETF units, underscoring institutional conviction in the rally.
Finally, demand from emerging markets—especially in India and China—has surged. Traditionally large consumers of gold and silver for jewellery and industrial use, both countries are seeing renewed retail buying after seasonal lulls. Jewellery retailers in Mumbai and Delhi reported brisk footfall as consumers rush to invest amid the price momentum.
While some analysts caution that metals can be volatile over the short term, many agree these five structural factors have combined to drive prices to historic peaks.
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