Gold prices have surged sharply while silver has declined since the outbreak of the US-Iran conflict, highlighting investors’ preference for traditional safe-haven assets during periods of geopolitical turmoil.
The war in the Middle East has triggered a global risk-off sentiment. This has pushed investors towards defensive assets such as gold, even as silver — which has significant industrial demand — has struggled to keep pace.
In the domestic spot market, gold prices have risen about ₹3,400 so far this month to ₹1,62,029 per 10 grams as of the close on March 4. In contrast, silver prices have dropped nearly ₹7,000 to ₹2,60,900 per kg since the conflict intensified over the weekend.
Market experts say precious metals generally serve as effective portfolio diversifiers, but gold tends to attract stronger buying interest during crises.
Manav Modi, commodities analyst at Motilal Oswal Financial Services, said gold’s role as a traditional safe-haven asset gives it an advantage over silver, which is partly dependent on industrial demand.
“If the conflict escalates and growth concerns rise, riskier assets — including industrial metals such as copper and silver — could see limited gains,” he noted.
Given the current environment, analysts suggest that investors may consider allocating a higher weight to gold than silver in their portfolios.
Nirpendra Yadav, senior commodity research analyst at Bonanza, said silver typically shows higher volatility compared with gold.
“Silver has a higher beta. It tends to rally faster when markets rise but can also fall more sharply when risk appetite improves,” he explained.
Despite strong safe-haven demand, gold prices have witnessed sharp intraday swings.
After opening higher on March 5, MCX gold later slipped into negative territory and hovered around ₹1,60,000 per 10 grams, reflecting profit booking and macroeconomic pressures.
Analysts say the upside in gold is being restrained by concerns about rising inflation driven by higher crude oil prices, as well as the strengthening US dollar.
NS Ramaswamy, head of commodity and CRM at Ventura, said the inflationary impact of rising oil prices is complicating the outlook for gold.
“Higher oil prices push inflation expectations, which in turn lift real yields and support the US dollar — both of which tend to limit gold’s upside,” he said.
Despite near-term volatility, analysts believe gold remains an important hedge against geopolitical and macroeconomic risks.
Rajeev Sharan of Brickwork Ratings, noted that gold has already reached record highs this year amid growing geopolitical uncertainty.
The rally, he said, reflects not only war-related concerns but also worries about US fiscal deficits and the long-term credibility of the dollar.
While the US dollar may continue to benefit in the short term from a flight to liquidity, its safe-haven status could weaken over time amid rising US debt and de-dollarisation trends.
For investors seeking protection from geopolitical shocks and policy uncertainty, analysts suggest maintaining a higher allocation to gold while complementing it with selective short-duration US debt instruments.
