WHY GOLD PRICES surge during international tensions or crisis: Whenever something happens in the world that causes widespread stress or emergency, for example a large epidemic or war situation, the cost of gold often increases rapidly. This has been not only once, but often. Whether it is a Kovid-19 epidemic, Russia-Ukraine war, or a conflict between West Asian countries, or the state of Pakistan Pakistan war, gold prices rise every time. Why does this happen? What are the 5 main reasons for the rise in gold prices during the crisis?
Like many other things, the price of gold depends mainly on its demand and supply. When investors start buying a large amount of gold for any reason, the demand suddenly increases. While the supply of gold mining or central bank sales is limited due to stable supply. In such a case, due to high demand and low supply, prices begin to rise rapidly. This is an additional technical reason for the price, but it is interesting to know why the demand for gold increases in times of stress.
Gold "Safe haven asset" It is said, that is, an investment that is also safe in times of emergency. When the stock market decreases or the currency is weak, investors find stable assets. Gold has been meeting this requirement for centuries. This is the reason why whenever tensions increase globally, people buy more gold and increase the price of gold due to demand.
Whenever there is a war or a geo-political tenson in the world, it has an impact on the economy. In the affected countries, the currency is weak, the stock market decreases and there is a danger of inflation. In such an environment, gold becomes the most reliable asset. For example, during the Gulf War (1990-91) and the Russian-Ukraine conflict, it was found that gold prices increased significantly. People are afraid that the situation can worsen, so they consider gold a safe alternative and investing in it.
When war or tension is created in a country, its defense budget is suddenly increased. This increases the total cost of the government and often its direct impact is seen as inflation. As the currency value decreases, people find alternatives that protect them from inflation – and that is the option of gold. Due to this, there has been a direct relationship between the two – the increase in defense costs and the increase in gold prices.
In a country like India, gold is very important not only as an investment, but also culturally. Gold is purchased on weddings, festivals and religious occasions. This is the reason why whenever there is economic uncertainty, people consider cash more secure to convert cash into gold. This traditional thinking of Indian investors also increases the demand for gold in times of emergency.
Gold is not just a precious metal, but in the atmosphere of economic and political instability it becomes a reliable companion of investors. Whether it is western countries or traditional markets like India, the importance of gold increases in times of crisis everywhere.
Gold and silver are definitely seen in every house of India, people buy gold and silver on every auspicious occasion of the house, so click here to find out what is going on.
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