Gold prices see major decline of over 20 per cent despite global tensions

Despite increasing conflict in West Asia and global uncertainty, a significant decline in gold prices is being observed. At the beginning of this year, the price of gold had crossed $5,300 per ounce, but it has now reached around $4,100. Thus, a decline of more than 20 per cent from the peak level has been recorded in gold prices.

According to a report by Sandesh Explainer, the main reason behind this decline is the increase in the prices of essential commodities such as crude oil and natural gas. For countries like India, energy imports are indispensable, whereas gold imports are considered a luxury expense. When the prices of oil and gas rise, the pressure of import costs on the country increases, which has a direct impact on gold purchases.

According to the third quarter report of the World Gold Council, there has been no major change in the total demand for gold, but there has been a shift in the type of buyers. This time, central banks, especially the central banks of China and Poland, have increased gold purchases. Investors' interest in Gold ETFs has increased, while there has been a decrease in the purchase of gold coins and bars. Compared to last year, the demand for jewellery is also much lower.

Gold is a chemical element with the chemical symbol Au and atomic number 79. In its pure form, it is a bright-metallic looking yellow, solid, soft, and malleable metal. It is a transition metal and one of the least reactive elements, ranking second after platinum.