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If you are thinking of purchasing gold and silver jewelery or coins for the upcoming festive season, then this news can spoil your pocket budget. In fact, on Friday, once again a stormy rise in the prices of gold and silver was recorded in the bullion and commodity markets. On Friday, the futures price of gold on Multi Commodity Exchange (MCX) jumped to around ₹ 1,61,200 per 10 grams. It is Rs 1,771 or about 1.11% more than its previous closing.

On the other hand, a huge increase of Rs 3,128 i.e. 1.29% was recorded in the futures price of silver, after which silver was trading at around ₹ 2,46,371 per kg. This surge in the prices of gold and silver in the Indian market has come at a time when gold prices in the international market have reached their highest level in almost three months. It is noteworthy that in the month of January this year, gold in India has touched the all-time record level of ₹ 1.80 lakh per 10 grams and silver ₹ 4.25 lakh per kilogram.

After all, why did the prices of gold and silver suddenly rise?

According to market experts, the weakening US dollar in the international market, changing expectations regarding US interest rates, ongoing fluctuations in bond yields and global geopolitical tensions are the main reasons due to which investors' inclination has once again increased rapidly towards safe-haven assets.

Experts clearly believe that the upcoming interest rate policy of the US Federal Reserve is going to prove to be very decisive for the future movement of gold. At present, the eyes of financial investors around the world are fixed on the Fed's interest rate decision coming next month, where the possibility of keeping the interest rates stable is considered high.

Direct impact of Federal Reserve policy and crude oil

As per general economic rules, high interest rates are considered negative for gold investments. On the contrary, when expectations of softening of interest rates increase or there is an environment of economic uncertainty at the global level, investors move money out of risky options like the stock market and take refuge in safe assets like gold.

Apart from this, fresh fears of America imposing tough economic sanctions on Iran have also increased the uncertainty in the bullion market. Due to these sanctions, there has been a surge in the prices of crude oil in the international market, due to which the concern of increasing inflation at the global level has deepened again.

Weakening US dollar became the reason for the rise

Another major reason for this rise in prices is the weakness in the exchange rate of the US dollar. The dollar index fell to around 98.8 and remained bearish throughout the week. Since the prices of gold and silver in the global market are fixed in dollars, it becomes relatively cheaper for investors from countries with other currencies to buy bullion when the dollar weakens.

Due to this, there is a sudden increase in demand in the global market, which provides strong support to the prices. Along with the weak dollar, frequent changes in US treasury yields have also directly affected the commodity market sentiment.