Gold and Silver Prices Decline Sharply Amid Uncertainty Over US-Iran Ceasefire Deal

Global Markets Rebound as US-Iran War Tensions Ease

Gold and silver prices plummeted up to 3% on Thursday, following a two-session gain, as investors reassessed the likelihood of a diplomatic resolution to the US-Iran conflict. The COMEX gold price fell over 1% to trade above $4,700 per ounce, while COMEX silver prices tumbled 3% to $73 per ounce during Asian trading hours.

The White House announced plans to engage in direct talks with Iran, despite Tehran's continued attacks on Gulf nations. The Strait of Hormuz, a critical oil shipping route, remains largely obstructed. Oil prices rebounded from their steepest single-day decline since April 2020, while equities moved higher and the dollar weakened on Wednesday. These factors lent support to gold, which is priced in US currency.

Since the conflict began nearly six weeks ago, gold has generally moved in line with equities, with its safe-haven appeal muted by investors needing liquidity to offset losses elsewhere. However, the prolonged conflict has pushed up energy prices and heightened inflation concerns, increasing the likelihood that central banks may delay rate cuts or even consider raising rates. This poses a challenge for gold, which typically performs better in a low-interest-rate environment.

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The Federal Open Market Committee's March 17-18 meeting minutes revealed policymakers grappling with sharply contrasting economic outlooks. Minutes from the meeting showed that policymakers were considering the impact of the conflict on economic growth, the labor market, and interest rates.

Market Outlook

Aksha Kamboj, Vice President of the India Bullion & Jewellers Association (IBJA) and Executive Chairperson of Aspect Global Ventures, believes that geopolitical uncertainties have boosted demand for gold as a hedge. Kamboj recommends investors to stagger their investments rather than make one large purchase, as periodic volatility is likely to persist.

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For silver, Kamboj notes that its price tends to fluctuate more frequently compared to gold, making it more volatile. Investors are encouraged to employ a step-by-step investment approach, utilizing periods of corrections in silver prices instead of buying when it is at a peak.

Enrich Money's CEO, Ponmudi R, provides a technical outlook on gold prices. COMEX gold is trading below the $4,800 range, with ongoing geopolitical uncertainty continuing to support prices. A sustained move above $4,900 could improve momentum toward the $4,950-$5,000 zone. However, a break below $4,800 may accelerate selling toward $4,750 and potentially $4,700-$4,650.

On the silver prices outlook, Ponmudi notes that the white metal is trading below the $74 range, with the tone gradually strengthening. Continued industrial demand is providing support, and price action is showing improving conviction. A move above $78 could push prices toward $79-$80. However, a break below $76 may increase pressure toward $74-$73, with deeper support at $71-$70. The overall structure is showing signs of strengthening.