US-Iran Tensions Weigh on Demand for Safe-Haven Metals

Volatility in Gold and Silver Prices Amid US-Iran War

The ongoing US-Iran war has led to significant volatility in gold and silver prices in 2026, with both metals experiencing losses that have raised questions about their safe-haven appeal. According to Kaynat Chainwala, AVP - Commodity Research at Kotak Securities, gold prices plummeted by nearly 25% to around $4,100 in late March before rebounding to about $4,900 per ounce by mid-April. This volatility was also seen in silver, which dropped to nearly $61 per ounce before rallying past $83, highlighting its dual nature as both a safe-haven asset and an industrial metal.

Despite the recent losses, Chainwala remains bullish on both metals, stating that their safe-haven appeal has not disappeared. On Wednesday, MCX gold June futures climbed over ₹2,000, or 1.3%, to ₹1,53,699 per 10 grams in early trade, while MCX silver May futures surged more than ₹4,700, or 2%, to ₹2,49,423 per kg. In global markets, spot gold rose 1.1% to $4,762.22 per ounce, while US gold futures for June delivery advanced 1.3% to $4,781. Spot silver traded 2.2% higher at $78.38 per ounce.

The sharp rise in crude oil prices, coupled with ongoing uncertainty over the US-Iran war, has heightened fears of a resurgence in inflation. This has weakened expectations of near-term interest rate cuts by the US Federal Reserve, thereby exerting pressure on gold and silver prices. According to Reuters, US Federal Reserve chair nominee Kevin Warsh stated on Tuesday that he had not made any commitment to the US President regarding interest rate cuts. His remarks were intended to reassure US senators that, if appointed Fed Chair, he would operate independently of the White House.

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The US dollar also strengthened amid the US-Iran war, further weighing on the precious metals. This has led to increased costs for holding non-yielding assets like gold and silver, while liquidity stress amid war volatility prompts sales of even 'safe' assets for cash, a classic flight to USD amid funding squeezes, limiting upside despite ongoing uncertainty.

Chainwala further explained that if geopolitical risks begin to weigh on global growth or trigger broader risk aversion, demand for precious metals could strengthen again. "In this environment, gold and silver are acting more as conditional safe havens, performing better during periods of dollar weakness or growth slowdown than on geopolitical headlines alone, making them tactical, not automatic, havens in this inflationary standoff," she said.

Anuj Gupta, a SEBI-registered research analyst, also believes that gold and silver continue to be safe-haven assets amid ongoing uncertainty; however, rising crude oil prices and elevated inflation could limit any sharp rally in gold and silver, as they may prompt central banks to tighten monetary policy. According to Gupta, gold could potentially surge to the $5,000 mark, while silver may move toward the $85 level in the near term.

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