Gold and Silver Markets Face Uncertainty Amid US-Iran Conflict: Which Precious Metal Will Outperform?

Gold and Silver Prices Rally on US-Iran Ceasefire Extension

Gold and silver prices surged on Wednesday following the extension of the US-Iran ceasefire, easing geopolitical tensions and reducing concerns over potential inflation and a prolonged high interest rate environment. Spot gold rose 1.1% to $4,762.22 per ounce, while US gold futures for June delivery gained 1.3% to $4,781. Spot silver prices surged 2.2% to $78.38 per ounce.

The rally in gold and silver prices came after US President Donald Trump announced an indefinite extension of the ceasefire with Iran to facilitate further peace negotiations, just hours before the deal was set to expire. The move significantly reduced near-term geopolitical risks, leading to a decline in crude oil prices, a softer US dollar, and supporting precious metals.

In the domestic market, gold and silver prices on the Multi Commodity Exchange (MCX) mirrored global trends. MCX gold rate rose by ₹1,900, or 1.25%, to ₹1,53,571 per 10 grams. MCX silver prices climbed ₹5,801, or 2.37%, to ₹2,50,502 per kilogram.

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Despite the synchronized rally, the outlook for gold and silver diverges in terms of risk-return dynamics. Gold continues to function as a relatively stable safe-haven asset, supported by ongoing geopolitical uncertainties, sustained central bank purchases, and its traditional role as an inflation hedge. Silver, by contrast, offers higher return potential but is accompanied by greater volatility due to its dual nature as both a precious and industrial metal.

According to Ruchit Thakur, Market Analyst at VT Markets, while real yields remain elevated, the pace of increase has slowed, providing some support to gold prices. However, silver's strong structural demand from high-growth sectors such as solar energy, electronics, and electric vehicles enhances its medium-term appeal. Thakur also pointed out that the gold-to-silver ratio remains elevated, indicating a potential mean reversion.

Vandana Bharti, Head of Commodity Research at SMC Global Securities, noted that the current geopolitical backdrop favors silver both technically and fundamentally. She explained that silver's extensive use in industrial applications — particularly in solar panels, electronics, and advanced technologies — positions it to benefit from improving trade flows and manufacturing activity in a relatively stable geopolitical environment.

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Kaveri More, Commodity Analyst at Choice Broking, also expects silver to outperform gold, citing both technical indicators and macroeconomic factors. With the gold-silver ratio currently around 60:1, there is scope for further narrowing. The easing of geopolitical tensions is likely to boost expectations of economic recovery, thereby increasing demand for silver in sectors such as renewable energy, electric vehicles, and technology.

However, not all experts are uniformly bullish on silver. Jigar Trivedi, Senior Research Analyst at IndusInd Securities, emphasized that gold remains the more reliable option for investors seeking stability. He described the current environment as a "mixed setup," where gold represents a defensive hedge, while silver is a higher-risk, higher-reward play.

From a medium-term perspective of four to six months, Trivedi expects MCX gold prices to rise to ₹1,70,000 per 10 grams and MCX silver price to reach ₹3,20,000 per kilogram, underpinned by a broadly positive outlook for the bullion complex.