US-Iran Tensions: Potential Impact on Gold Prices in India
Gold Prices Surge Amid Rising Tensions in the Middle East
Market Trends
On March 2, gold prices experienced a sharp rally, tracking strong gains in global bullion markets. The US and Israel launched a major strike on Iran, reportedly resulting in the death of Supreme Leader Ayatollah Ali Khamenei and heightening global economic uncertainty.
Indian Market Performance
In the Indian market, MCX gold for April futures began the session up ₹3,397, or 2.09%, at ₹1,65,501 per 10 grams, compared to the previous close of ₹1,62,104. Prices surged as much as 3.88% to touch a high of ₹1,68,378.
International Market
On the international front, COMEX gold prices surged to $5,400 per ounce during the intraday session on March 2.
Expert Analysis
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According to Aksha Kamboj, Vice President, India Bullion & Jewellers Association (IBJA) and Executive Chairperson, Aspect Global Ventures, the rising tensions between the US and Iran have increased geopolitical risks, driving safe-haven assets such as gold. If the US-Iran conflict continues, the risk premium for investors would increase, pushing gold prices in India to new records.
Key Drivers
- Geopolitical risks: Rising tensions between the US and Iran have increased geopolitical risks, driving safe-haven assets such as gold.
- Inflationary pressures: Inflationary pressures due to rising crude oil prices following the disruption in the Middle East could also elevate the prices.
- Monetary policy stance: The outcome of the conflict, the monetary policy stance, and currency value will determine the extent of the rally.
- Currency value: A significant event, such as a confirmed large-scale Iranian attack on a U.S. aircraft carrier, would likely trigger strong U.S. retaliation and fuel another wave of safe-haven buying.
Technical Outlook
According to Ponmudi R, CEO of Enrich Money, MCX Gold futures are trading in the 1,65,000–1,70,000 range after consolidating post the sharp correction from all-time highs near 1,80,000–1,81,000. If prices sustain above ₹1,65,000, it may revive momentum toward 1,70,000–1,75,000, preserving a bullish medium-term perspective.
Recommendations
Investors are advised to keep a check on the overall scenario and monitor the extent of the rally.
Investor Takeaway
Investors should be prepared for potential market volatility and increased risk premium due to rising geopolitical tensions.
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