Finance Minister Nirmala Sitharaman has said that the volatility in gold prices is arising due to the global uncertainty, according to news agency PTI on Monday, Feb. 2. The yellow metal's swing in prices has spooked commodity market investors. FM Sitharaman also added that the reason why investors do not have confidence in any particular currency is due to the uncertainty in the markets.
She added that due to these global uncertainties, central banks too have been investing in gold. "It also shows that investors do not have confidence in any one particular currency, and hence the rush to buy gold," FM Sitharaman said, according to PTI. Aggressive buying by several central banks has also added to the surge in the price of gold and silver, she said.
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Meanwhile addressing the rise in bond yields, the Finance Minister said the government was conscious of the movement but noted that yields depend on multiple factors. "Given the levels of development activity, bonds are one way to raise money, but bond yields are a deterrent," she said, adding that it was an evolving situation that would need to be studied.
Gold and silver prices crashed in the previous session after increased CME margin requirements added to the selling pressure following last week's selloff among the precious metals. Bullion shed more than 9.8% on Jan. 30, in its sharpest one-day drop since 1983. Gold has lost about $900 since hitting an all-time-high of $5,594.82 on Jan. 29, erasing most of this year's gains. Spot silver has shed about 33% since notching up an all-time-peak of $121.64 last week. The CME announced hikes in margins on its precious metal futures on Jan. 30 and said the changes were set to take effect after market close on Monday.
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