Oil Price Surge Triggers Volatility in Gold and Silver Markets
Oil prices have surged to over $108 per barrel amid escalating tensions in the Middle East. Brent crude briefly touched this mark, driven primarily by concerns about shipping disruptions and potential impact on crude supplies along key regional routes.
Despite the sharp rise in oil prices, gold and silver futures saw a decline. Gold fell nearly 1 percent to $4,365 per ounce, while silver declined 1.58 percent to $63.90 per ounce.
Nirpendra Yadav, Sr. Senior Research Analyst at Bonanza Portfolio, notes that an oil-price shock can increase geopolitical and inflation risks, strengthening demand for gold as a safe-haven asset. However, a sustained rise in crude prices can also push headline inflation higher, reduce expectations of monetary easing, and lead to higher bond yields and a stronger dollar.
Yadav estimates that silver could remain more volatile than gold due to its industrial component. He advises investors against chasing sharp moves in gold or silver solely because crude oil has crossed $100.