Gold Prices Surge ₹3,000 Amid US-Iran Conflict, Silver Prices Plummet ₹7,000

Global Market Analysis: Middle East Conflict Drives Safe-Haven Assets

The ongoing Middle East conflict between the United States, Israel, and Iran has led to a significant risk-off mood globally, resulting in a surge in demand for safe-haven assets like gold and silver. As of March 4, gold prices in the domestic spot market have risen by ₹34,000 to ₹1,62,029 on a month-to-date basis.

Silver prices, however, have declined by ₹7,000 to ₹260,900 since the start of the US-Iran war over the weekend, indicating a preference for gold over silver during times of conflict. Analysts also prefer gold over silver, citing its traditional safe-haven status and ability to act as a great portfolio diversifier.

Motilal Oswal Financial Services (MOSL) Commodities Analyst, Manav Modi, notes that gold will have more buying interest than silver due to its lack of industrial usage. In contrast, silver has a higher beta, making it more prone to sharp price fluctuations.

Read also: Gold and Silver Prices Decline Amid Strengthening Dollar and Inflation Concerns

Gold prices have faced limited gains due to inflation worries on rising crude oil prices and the strengthening US dollar. Traders have priced in a roughly 80% chance of more than one quarter-point rate cut by the Federal Reserve this year, according to a Bloomberg report.

Ventura Head of Commodity & CRM, NS Ramaswamy, explains that the inflationary consequences of the conflict – higher oil prices – are working against gold by pushing real yields and the US dollar higher. However, gold has already surged to record highs this year, reflecting not only geopolitical anxiety but also concerns over US fiscal slippage and the dollar's medium-term credibility.

Brickwork Ratings Head – Criteria, Model Development & Research, Rajeev Sharan, recommends a calibrated overweight in gold, complemented by selective short-duration US paper, as the most resilient mix for investors seeking protection from both geopolitical and policy risks.