Bilateral jumps in gold prices amid the war effect

- Bullion Bits ઃ Dinesh Parekh

- According to experts, by the end of this year, the price of gold in the world market is likely to exceed 200 an ounce.

News of the end of the war between Russia and Ukraine in the international market sent gold prices plummeting to ૪૫ 20-2 an ounce on Tuesday, with New York's Comex market quoting ૮૯૩ 15 an ounce, after which the price continued to hover around ૯૩૬ 15 an ounce. It bounced back from ૯૪૯ 15 to 120, and finally to ૯૨ 151 to 15.

Everyone started buying gold in the hope that the US job data would improve the financial situation. In addition to the importance of store value hidden in gold, increased demand for gold began to buy gold at lower prices.

The fight has had a serious impact on the gold jewelry trade, with reports from Dubai saying that the Dubai gold market has seen a decline in consumer mobility and a decline in jewelry sales. Money can be made by buying. Orders from gold jewelry exporters began to be canceled during the war. But with zero import duty on gold jewelery in Dubai, traders in jewelery-exporting countries believe that the trade in jewelery will increase in the near future.

Gold prices are strengthening on the back of weakening dollar and rising Treasury bond yields. In the midst of this war, Russia has waived the 30 per cent value-added tax on Russians who buy private gold to stem the declining value of the ruble. This is because after March 1, the Russians started using gold instead of keeping their capital in rubles, and helped break the ruble to its lowest level. The ruble has depreciated sharply following Western sanctions.

Dmitry, a senior vice president at Russia's state-run VTB Bank, said they had started selling 1-1kg of gold from March 1. Analysts say that the government has attracted people to buy gold by fixing the price of one gram of gold at 2,000 rubles per gram when those who start buying gold have less money. (૧ 1: 2.50 rubles).

The war between Russia and Ukraine has created new equations in the global financial markets and China plans to reintroduce the gold standard as an alternative to the dollar. China has once again started buying gold from the world market through the Shanghai Gold Exchange since 2000. Today, China has 301 tonnes of gold in reserves and will soon replace the US reserves with a new currency, the dollar.

As the value of the dollar continues to decline in the global market, the prevalence of the dollar in global financial transactions has dropped from 40 per cent in 2013 to 20 per cent in 2020, while in China it has fallen from 20 per cent in 2016 to 9 per cent in 2020. Circumstances are emerging where China devalues ​​the dollar and creates new equations. The price of gold in the world is still quoted in dollars and there is a saying that as the dollar strengthens, gold softens and when the dollar softens, gold prices strengthen. China is trying to disprove this statement.

Falling oil prices and rising again will support the gold bulls and the rise in interest rates will give a new impetus to gold as the negative impact on gold will be neutralized. Experts say gold will hit 50 an ounce by the end of this year.

Hopes of a war deal had a short-term effect on world silver prices, and silver fell and was quoted at 5 cents an ounce. Bank of America's silver holdings in New York's Comex vault, which was 6 billion three months ago on 21-12-2021, has begun to break Morgan's monopoly today, rising to 4.5 billion. Morgan has been able to fluctuate silver prices in the market over the last several decades due to its silver holdings, and today Morgan's silver holdings are half a billion dollars more than Bank of America at 3 billion. New York's Comex market has a short-term credit position of 200 million ounces, while the world's annual silver production stands at 1,200 million ounces. Experts say that silver, which is still undervalued, could hit ત્યારે 50 an ounce at any time, raising its shortfall.