New Delhi: Investors shifted their funds to stock markets at the expense of the gold and silver prices, which dropped heavily. The Indian stock markets responded positively to the Union Budget after earlier losing their reactions. Sensex as well as Nifty closed up, which impacted positively on investors.
Gold is generally regarded as a safe investment in the periods of uncertainty. When stock markets are performing well, however, the investors tend to liquidate gold and invest in shares. This change in investment led to the fall in price of gold and silver in the international and Indian market.
The other factor that has contributed to the decline in gold prices is the US strong dollar and the increase of bond yields. Gold is not attractive when the interest rates increase since it does not bear interest. This has decreased the demand of precious metals.
In the meantime, the Indian stock markets were cured following some negative reactions to certain Budget announcements in the past. Shareholders gradually realized the gains of higher government expenditure and financial restraint in the long run. Purchasing interest back in banking, infrastructure and capital goods stocks.
There is a possibility that the decline in the prices of gold and silver will persist due to high interest rates in the world, according to experts. Nevertheless, they are also convinced that gold is not going to lose its significance as a long-run investment in times of uncertainty in the world.
