The effect of America’s debt problem can be seen on the gold price.Image Credit source: File Photo

This week, the effect of America’s debt problem can be seen on the gold market. In America, an agreement has been reached between the Joe Biden government and the Republican Party to increase the debt limit. Despite this, its effect on the gold price can be seen for sure.

Market experts believe that the effect of increasing the debt ceiling in America will be temporary. While the price of gold is also affected by the exchange rate of dollar and rupee. In such a situation, the effect of this problem can be seen on the prices of gold.

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Gold price will remain weak

In the current week, the price of gold is estimated to be below Rs.61,000. Dollar index will also play a role in keeping gold weak. Gold price on MCX is currently at Rs 59,406 per 10 grams. This is also when a quick solution has been found to the debt ceiling problem in America. Whereas earlier it was expected to fall to Rs 58,500 per 10 grams.

Rupee has become weaker than dollar

Similarly, if we look at the figures of the last two weeks, then the rupee remains weak against the dollar. This is due to the continuous strengthening of the dollar position. Due to the continuous increase in interest rates in America, investors from all over the world are investing in dollar by pulling money from other currencies, which is making it a strong currency.

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However, now that an immediate solution to America’s debt problem has been found and it has got two years’ relief in the matter of debt ceiling. In this situation, this fall in rupee can stop. Nevertheless, the Indian currency still remains at the level of Rs 82.50 against the dollar, which can remain intact for a long time.

Can gold prices increase?

Due to the problem of debt ceiling of America, a situation of tension could be seen in the markets around the world. Now that its solution has been found, then a new expectation of the market has also arisen regarding the reduction of interest rates in America. If the US Federal Reserve decides to rein in policy interest rates or does not hike further, then the fortunes of both the rupee and gold may change.

If the Federal Reserve does this, then the dollar index may weaken, due to which the value of the rupee may increase. At the same time, its impact on the gold price is also expected to be positive.