Gold and Silver Prices Fall Sharply Worldwide, Gold Drops Below $4,100 an Ounce
Gold and silver prices have fallen sharply on the world market. On Thursday (22 October), amid fears that rising energy prices will keep inflation and interest rates high for a long time, the price of gold dropped below $4,100 per ounce on international markets.
According to a report by Turkey's Anadolu Agency, spot gold traded at $4,088.95 per ounce as of 8 a.m. GMT (2 p.m. Bangladesh time), down $52.15, or 1.26 percent, from the previous day.
Silver took an even bigger hit the same day. Its price fell by $2.70, or 3.57 percent, to $55.89 per ounce. As a result, neither precious metal could hold on to the gains made in the previous day's trading.
Renewed geopolitical tension in the Middle East played a major role behind the fall. After a drone attack on Saudi Aramco's Shaybah oil facility on Wednesday (21 October) killed two people, turmoil hit the oil market and crude prices moved upward.
In view of the situation, the United States ordered some staff of its diplomatic missions in Saudi Arabia and their family members to leave the country, adding to the uncertainty in the markets.
The rise in energy prices has heightened fears of persistent inflation worldwide, challenging central banks' plans to loosen monetary policy. Market analysts believe the US Federal Reserve (the Fed) will keep interest rates unchanged next week.
But with energy-driven inflation pressure continuing, market participants are not ruling out the possibility of a further rate hike in December this year. It is that prospect of higher rates that has put pressure on the precious metals market.
Although gold is traditionally considered a hedge against inflation, high interest rates raise the cost of holding assets that pay no interest income, which reduces gold's appeal — the explanation analysts give for this latest fall.
Alongside the US Fed, the European Central Bank and the Bank of Japan are also expected to keep their current interest rates unchanged next week. With decisions from three major central banks due in the same week, the market's attention is fixed on them.
With this latest drop, gold has lost 4.62 percent and silver 13.11 percent over the past month. Silver's rate of decline is nearly three times that of gold, causing greater concern among small investors in that metal.
Such falls on the world market can also affect the domestic market, since gold prices in Bangladesh are set in coordination with international prices. Whether a new domestic price will be announced, however, depends on the decision of those concerned.
Next week's interest-rate decisions by the central banks and the course of the Middle East situation will determine whether gold and silver recover from this blow or whether the slide continues.
