Perspective on the fall in prices of precious metals by Mr. Sachin Sawrikar, Managing Partner, Artha Bharat Investment Managers IFSC LLP
Below the Perspective on the fall in prices of precious metals by Mr. Sachin Sawrikar, Managing Partner, Artha Bharat Investment Managers IFSC LLP
Precious metals came under pressure today, a move driven not by fading risk aversion but by crude oil competing for the same pool of inflation-hedge capital.
With Brent crude trading above $110 a barrel, inflation expectations have repriced sharply. Markets are increasingly discounting future rate cuts, the same macro dynamic that powered gold’s more than 40 percent rally over the past year. In periods of geopolitical stress, safe-haven capital does not disappear; it is reallocated. At present, energy markets are absorbing a larger share of those flows as investors position for an inflationary, rather than deflationary, shock.
Silver’s sharper decline relative to gold reinforces this interpretation. Given its greater industrial exposure, silver is more vulnerable to demand-destruction risks that prolonged high energy prices tend to generate, leaving it more exposed in a growth-sensitive environment.
The broader structural case for gold, however, remains unchanged. Central bank buying continues, the long-term stability of the dollar-centric reserve system remains under debate, and global real interest rates remain contested rather than decisively restrictive. The current move reflects energy-driven inflation anxiety, not a reversal of gold’s secular trajectory.
In this context, the pullback in MCX gold prices toward the Rs.1.5 lakh level appears consistent with consolidation rather than capitulation."
Above views are of the author and not of the website kindly read disclaimer
