look news india
Gold prices increased: When there is a war or any other type of financial crisis anywhere in the world, two things happen. One is that the stock market falls and the other is that the price of gold increases. This was the case when the Russia-Ukraine war began, and it is also the case with the recent war breaking out between Iran and Israel. Stock markets around the world have crashed, while on the other hand, gold prices have seen a rise. How does gold rise even though war brings recession in all sectors? Let us understand.
Iran-Israel war increased the shine of gold
Last Tuesday, Iran launched a missile attack on Israel. In protest, Israel announced a strong response to the attack. Due to which tension has increased all over the world. In view of the war, the prices of crude oil have suddenly increased by 5 percent and a sharp rise has also been seen in the prices of gold. On Thursday morning, the price of 24 carat gold in the local market increased from Rs 75,615 per 10 grams to Rs 76,082 per 10 grams. However, this increase is less than expected.
The price of gold increased so much during the Russia-Ukraine war
In February 2022, the price of 10 grams of gold was Rs 50000, which fell to Rs 55000 in a few days due to the Russia-Ukraine war. By the end of last year this price was Rs 63,000. Now it has crossed the level of 76000.
Why does gold become expensive in disasters?
In case of war, epidemic like Corona or any kind of geopolitical tension, there are many reasons for the price of gold to increase. In times of crisis other assets fall in value, stock market also falls, but gold is the only thing which does not lose its shine, as people consider it as the safest investment option. In times of crisis, not only common people but also governments start buying gold. As demand increases, prices also increase. People survive in times of economic crisis by selling gold. Governments also support the country's economy by pledging gold. In short, gold being the most reliable 'mass' is withdrawn even in times of crisis, thereby increasing its price.
A vicious circle – war, inflation, inflation and currency devaluation
During war, import-export trade between countries is adversely affected, leading to shortage of goods. As a result, inflation and inflation increase. The currency of that country gets devalued. The price of gold remains stable even when the value of money falls, which is why people like to invest in gold. Due to the war between Iran and Israel, the price of crude oil has increased to more than $ 77 per barrel. Increase in fuel prices affects transportation and increases inflation. This vicious cycle continues until the crisis period ends.
Gold is proving a series of crisis periods
Apart from geopolitical tensions, economic uncertainty and disasters like war, gold prices also rise when superpowers like the US cut interest rates. One important thing is that people want such an investment option whose value does not reduce under any circumstances and that search stops at gold, so that the demand for gold remains constant. Thus, since gold is the most reliable chain link to keep the country's economy running in times of crisis right up to household kitchen appliances, its prices always keep rising even in times of crisis.