Gold, silver prices: The latest escalation in Middle East tensions, as the US and Israel stepped up their war against Iran, while Tehran threatened a full closure of the Strait of Hormuz, investor sentiment has turned risk-off. This, in turn, has driven safe-haven demand and gains in precious metals like gold and silver.
After remaining in a consolidation phase for most of February, received a fresh fillip from the US-Iran war, driving them to multi-week highs. The conflict in the Middle East has raised fears of a protracted regional war and deepened uncertainty.
Against this backdrop, gold prices in the international markets topped the $5400 on Monday before witnessing some profit-taking in the late evening trade. However, . Back home, neared the ₹170,000 mark on Monday, with the trading set to resume in the evening session today, March 3.
Meanwhile, spot silver edged 0.2% higher to $89.64 per ounce on Tuesday, after climbing to a more than four-week high in the previous session.
The critical question for markets is duration — whether this proves to be a brief spike in risk premium or a prolonged shock. , while Defence Secretary Pete Hegseth rejected the idea of an “endless” war with Iran.
Secretary of State Marco Rubio said, “The hardest hits are yet to come from the US military.”
Satish Dondapati, Fund Manager, Kotak Mahindra AMC, said that in the short term, bullion prices may stay firm if geopolitical risks continue. However, if the situation cools down, some profit booking or a temporary correction can be seen, he warned.
What can cause gold and silver prices crash?
Despite maintaining a bullish outlook for the bullion, investors cannot rule out a sharp correction of 3-8% in case of a diplomatic breakthrough.
Harshal Dasani, Business Head at INVasset PMS, said that if tensions ease between the US and Iran, the safe-haven premium may unwind partially, leading to a 3–5% knee-jerk pullback in gold and possibly a sharper 5–8% reaction in silver given its higher beta.
He further added that it is unlikely to alter the structural trajectory of the metals. “It is important to understand that gold and silver are not rallying solely because of the war — the conflict is merely a catalyst accelerating an already strong macro setup. The underlying drivers remain intact: central bank buying, de-dollarisation trends, fiscal expansion in major economies, and persistent geopolitical fragmentation,” opined the expert.
Commenting on the near-term outlook for gold and silver prices, Gaurav Garg, Research Analyst at Lemonn Markets Desk, said a pronounced risk-off sentiment largely drives this rally, as investors rotate capital out of and into precious metals to hedge against potential war-related disruptions.
The current commodity market action shows that despite a stronger US dollar and fading expectations of aggressive , safe-haven demand is currently outweighing traditional headwinds.
Garg opined that in case of further escalation, gold could test ₹1,70,000 per 10 grams and may approach ₹3,00,000 per kg in the near term. However, any diplomatic breakthrough could prompt sharp profit-booking, given the rapid 3–6% rally over a short period, he warned.
The remains another factor keeping bullion upside in check. The dollar hovered close to a more than five-week high, supported by firm demand and cautious market sentiment. Dondapati said that if the dollar strengthens further, gold could face pressure.
He believes that global investor allocation to gold is still low at around 2–3% of total financial assets, leaving room for higher allocation as the medium-to-long-term outlook remains bullish.
The broader bullishness is underpinned by liquidity and positioning. Gold holding around 5,422 and silver closing near 110 in China signals sustained demand strength.
A temporary cooling in momentum may slow the pace of gains, but it is unlikely to reverse the direction, Dasani opined.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.