Gold benefits from the kind of geopolitical risks now flaring up
When the world edges toward open conflict, ancient instincts reassert themselves — and capital flows toward gold. As US-Iran military tensions escalated into direct confrontation in the waters off Sri Lanka, investors across global markets sought refuge in precious metals, pushing gold to $5,177 per ounce and lifting ETFs by as much as 5 percent. The movement is less a market event than a mirror: in it, one can read the collective anxiety of a world uncertain about what comes next.
- A US submarine sank an Iranian warship off Sri Lanka's coast, killing at least 80 people, while NATO intercepted an Iranian missile over Turkey — transforming regional tension into open military confrontation.
- Gold and silver ETFs surged up to 5%, with CME gold prices swinging violently between $5,000 and $5,400 before stabilizing near $5,200, reflecting the raw fear coursing through global markets.
- A retreating US dollar amplified bullion's appeal worldwide, with spot gold rising to $5,177/oz, silver climbing to $84.50/oz, and Indian MCX futures posting sharp intraday gains across both metals.
- Analysts warn that volatility will persist as long as the conflict remains unresolved, with failed US-Iran nuclear talks, disrupted Gulf energy exports, and a looming Federal Reserve decision all adding pressure.
- Gold — already up roughly 20% this year — is expected to hold support above $4,984/oz, sustained by safe-haven demand and a longer structural shift away from dollar-denominated assets.
When geopolitical risk spikes, money moves toward gold — and on Thursday, it moved fast. As US-Iran tensions escalated into open military confrontation, investors did what they have done for centuries, pouring capital into precious metals. Gold and silver ETFs climbed as much as 5 percent during the session, with Tata Gold ETF leading at Rs 16.45 and silver funds close behind.
The catalyst was stark. A US submarine had sunk an Iranian warship off Sri Lanka's coast, killing at least 80 people. NATO air defences simultaneously destroyed an Iranian ballistic missile bound for Turkey. These were not isolated skirmishes but part of a broader military campaign that had already claimed hundreds of lives — unfolding just as Iran's supreme leader's influential son emerged as a likely successor, signalling Tehran had little intention of standing down.
A second force amplified the rally: the US dollar weakened after touching a three-month high, making dollar-priced gold more accessible to global buyers. Spot gold rose to $5,177.26 per ounce, silver climbed to $84.50, and platinum advanced to $2,183.44. On India's MCX, April gold futures gained over Rs 2,157 and May silver contracts jumped Rs 5,682. Yet beneath the gains lay wild swings — gold had lurched between $5,000 and $5,400 before settling near $5,200.
Analysts read the pattern clearly. Senior market analyst Kyle Rodda noted that gold thrives on precisely this kind of geopolitical uncertainty, though he cautioned that volatility would persist until markets saw signs of peak escalation. The conflict had also sent oil prices sharply higher as Iran targeted Gulf shipping lanes and energy infrastructure, complicating the inflation outlook and dimming hopes for near-term monetary easing.
Looking ahead, analysts projected gold would hold support near $4,984 per ounce and silver near $74 per troy ounce, underpinned by safe-haven demand and a broader global drift away from dollar dependence. US jobs data due Thursday and Friday threatened further sharp moves. Gold, already up some 20 percent this year, remained suspended between the pull of fear and the push of economic reality — a tension, like the conflict driving it, with no clear resolution in sight.
When geopolitical risk spikes, money moves. On Thursday morning, as tensions between the United States and Iran escalated into open military confrontation in the Middle East, investors did what they have done for centuries—they bought gold.
Gold and silver exchange-traded funds climbed as much as 5 percent during the session, riding a wave of demand for assets that hold their value when the world feels unstable. Tata Gold ETF led the charge, rising 5 percent to an intraday high of Rs 16.45. Zerodha Gold ETF followed with a 3 percent gain. Nippon India Gold ETF, Angel One Gold ETF, 360 One Gold ETF, and The Wealth Company Gold ETF each advanced roughly 2 percent. Silver ETFs moved in the same direction, with Zerodha Silver ETF jumping nearly 3 percent to Rs 27.88, while Kotak Silver ETF, 360 One Silver ETF, and Angel One Silver ETF each rose about 2 percent.
The backdrop for this rally was unmistakable. On Wednesday, a US submarine sank an Iranian warship off the coast of Sri Lanka, killing at least 80 people. NATO air defence systems simultaneously intercepted and destroyed an Iranian ballistic missile headed toward Turkey. These were not isolated incidents but part of a broader military campaign that had already claimed hundreds of lives and sent shockwaves through global markets. The timing coincided with the emergence of Iran's supreme leader's influential son as a leading contender to succeed him—a signal that Tehran was unlikely to back down.
Beyond the geopolitical tremors, a second force was at work: the US dollar was weakening. After touching a three-month high earlier in the week, the currency retreated, making gold priced in dollars more affordable for buyers using other currencies. Spot gold rose 0.8 percent to $5,177.26 per ounce. April US gold futures gained 1 percent to $5,186.40. Silver climbed 1.3 percent to $84.50 per ounce. Platinum advanced 1.6 percent to $2,183.44.
On India's Multi Commodity Exchange, the moves were equally pronounced. April gold futures climbed more than Rs 2,157, or 1.33 percent, to Rs 1,63,265 per 10 grams. May silver contracts jumped Rs 5,682, marking a 2.1 percent rise to Rs 2,71,000 per kilogram. Yet beneath these gains lay significant volatility. CME prices for gold had swung wildly—plummeting from $5,400 to $5,000 before recovering toward $5,200. MCX Gold mirrored those swings, trading in a wide range between Rs 1,59,000 and Rs 1,70,000 before settling near Rs 1,64,000.
Analysts saw the pattern clearly. Kyle Rodda, senior financial market analyst at Capital.com, noted that gold benefits from the kind of geopolitical risks now flaring up. The weaker dollar and normalizing financial conditions had both contributed to the rally. But Rodda cautioned that uncertainty surrounding the war meant volatility would persist until markets saw signs of peak escalation. Jateen Trivedi, VP Research Analyst for Commodity and Currency at LKP Securities, echoed the concern: volatility was expected to remain elevated due to the ongoing Western Asia conflict and failed US-Iran nuclear talks.
The broader market context mattered too. Market participants widely expected the Federal Reserve to leave interest rates unchanged at its March 18 meeting, according to CME Group's FedWatch tool. Meanwhile, oil prices had jumped sharply as the US-Israeli conflict with Iran disrupted energy exports from the region. Tehran had targeted vessels and energy infrastructure, shut navigation routes in the Gulf, and triggered production halts stretching from Qatar to Iraq. Higher oil prices added to inflationary concerns and complicated the outlook for monetary easing, as Christopher Wong, a strategist at OCBC, observed.
Manoj Kumar Jain of Prithvi Finmart saw a longer-term dynamic at play. Continued safe-haven interest, combined with a broader shift toward de-dollarization, was expected to underpin gold and silver prices. In times of armed conflict, investors tend to rebalance their portfolios—a move that could provide additional momentum to precious metals. Silver was projected to maintain support at $74 per troy ounce, while gold was likely to retain support around $4,984 per troy ounce on a closing basis. The week ahead would bring more data: US jobless claims later Thursday, followed by the February employment report on Friday. Each release could move prices sharply. Gold, which had climbed about 20 percent so far this year and repeatedly touched record highs, remained caught between the pull of geopolitical fear and the push of economic data—a tension that showed no sign of resolving soon.
Notable Quotes
Gold benefits from the kind of geopolitical risks that we've seen flared up in the last few days. This crisis is something that supports gold prices in the long run, but uncertainty surrounding the war means we will continue to see heightened volatility.— Kyle Rodda, senior financial market analyst at Capital.com
Volatility is expected to remain elevated due to the ongoing Western Asia conflict and failed US-Iran nuclear talks, which continue to keep uncertainty high in global markets.— Jateen Trivedi, VP Research Analyst for Commodity and Currency at LKP Securities
The Hearth Conversation Another angle on the story
Why does war in the Middle East make people want to buy gold?
Because gold doesn't care about politics or currency collapse. When everything else feels uncertain, gold is the thing you can hold that has held value for thousands of years. It's not a promise from a government or a company—it's just gold.
But gold doesn't pay interest or dividends. Why not just hold cash?
Cash loses value when inflation rises, which is exactly what happens when oil prices spike because of conflict. And if your government's currency weakens—which the dollar did this week—cash in that currency becomes worth less. Gold doesn't have that problem.
So the weaker dollar helped gold prices go up?
Exactly. When the dollar weakens, gold priced in dollars becomes cheaper for someone holding euros or rupees. That creates more demand. It's a double effect: fear drives people toward gold, and a weaker dollar makes it more attractive to buy.
The article mentions 80 people died. Does that affect the price?
Not directly. Markets don't price in human cost—they price in uncertainty and risk. The deaths matter enormously as a human tragedy, but what moves the gold price is the question: will this conflict escalate further? Will it disrupt more oil supplies? Will it last weeks or months?
The volatility seems extreme—prices swinging from $5,400 to $5,000.
That's what happens when fear is the dominant emotion. Traders are trying to figure out what comes next, and there's no clear answer. Some sell on rallies thinking prices have peaked. Others buy on dips thinking they're getting a bargain. Until the conflict shows signs of resolving, that whipsaw continues.
What would make gold prices stabilize?
Either the conflict ends, or markets decide it won't escalate further. Right now, neither has happened. Iran's new leadership contender suggests they're digging in, not backing down. So volatility is likely to stay high.