Gold and Silver Prices Poised for Strong Opening Amid Middle East Escalation
Gold and silver prices are anticipated to begin the trading week on a robust note when markets resume on Monday, as intensifying tensions in the Middle East propel investors toward traditional safe-haven assets, according to market analysts. The surge in risk aversion follows a series of military actions and retaliatory strikes involving Israel, Iran, and the United States, creating a climate of heightened geopolitical uncertainty.
Geopolitical Turmoil Drives Safe-Haven Demand
The recent escalation includes Israeli attacks on Iran and subsequent Iranian missile strikes targeting US military installations and Israeli assets in the region. Iranian state media confirmed the death of Supreme Leader Ayatollah Ali Khamenei on Sunday, further fueling retaliatory actions. The United Arab Emirates has called on Iran to "go back to your senses" following attacks on cities like Dubai, Abu Dhabi, Doha, and Kuwait.
Market experts emphasize that the trajectory of bullion prices will heavily depend on the duration and intensity of the ongoing conflict, as global investors reassess their risk exposure amid fears of prolonged instability. "Gold and silver prices are set to remain highly volatile with a gap-up opening on Monday as the Middle East conflict, involving renewed US and Israeli military action against Iran, continues to dominate global risk sentiment," stated Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities.
Analysts Highlight Key Market Drivers
Trivedi added that escalating hostilities and diminishing hopes for a swift diplomatic resolution are driving capital flows into precious metals. "As global equities and risk assets come under pressure, capital tends to shift into precious metals, which act as a hedge against uncertainty," he explained.
On the domestic front, the commodities market will remain closed on Tuesday for the Holi festival. Last week, on the Multi Commodity Exchange (MCX), silver futures for March delivery surged by Rs 22,054 or 8.72 percent, while gold futures for April delivery rose by Rs 5,228 or 3.33 percent.
Pranav Mer, Vice President of EBG - Commodity & Currency Research at JM Financial Services, noted that bullion ended another week in positive territory, with silver rising over 8 percent and gold gaining 3.2 percent. "Bullion remains supported by safe-haven bids, persistent buying from central banks and exchange-traded funds, amid rising geopolitical and economic uncertainty in global markets," Mer said.
International Markets and Additional Factors
In international markets, Comex silver futures jumped by USD 10.34 or 12.55 percent over the past week, while gold gained USD 167 or 3.3 percent. Trivedi also pointed to energy market developments, indicating that rising crude oil prices due to fears of supply disruptions through the Strait of Hormuz are further bolstering interest in bullion.
However, analysts caution that the impact may not be uniform. "If over the weekend there are diplomatic developments or indications of de-escalation, precious metals could see profit-taking after an initial spike of 3-6 percent," Trivedi warned.
Additionally, macroeconomic data releases this week are expected to influence global market sentiment. Key indicators include manufacturing and services PMI readings, US retail sales, non-farm payrolls and employment data, Eurozone inflation figures, and the European Central Bank meeting.
Mer highlighted that the recent US Supreme Court ruling against former President Donald Trump's trade tariffs, terming most of them illegal, has added to global uncertainty, with several companies filing refund lawsuits.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India or Bharat Horizon.
