Gold prices slumped by Rs 9,050 to Rs 1.43 lakh per 10 grams, while silver tumbled Rs 10,500 to Rs 2.30 lakh per kg in Delhi on Monday, even as geopolitical uncertainties persist. Typically, during periods of economic and geopolitical stress, gold and silver—considered safe-haven assets—tend to rally. This time, however, the trend has reversed.
After touching a peak of Rs 1.7 lakh per 10 grams in March, gold has fallen to Rs 1.43 lakh.
Silver, which breached Rs 3.5 lakh per kg in January, has declined to Rs 2.3 lakh.
The sharp correction raises a key question. Why are the yellow and white metals losing their safe-haven appeal even amid the ongoing West Asia conflict?
The New Indian Express spoke to commodity experts to understand the unusual rally until end-January and the subsequent fall since the Iran war began on February 27-28, a period during which the expected safe-haven rally has been conspicuously absent. This divergence is particularly striking when compared with earlier episodes such as Russia's invasion of Ukraine in February 2022, Israel’s attack on Hamas in October 2023, and its strike on Iran in June 2025.
Renisha Chainani, Head of Research at gold trading platform Augmont, said gold and silver have not structurally lost their safe-haven status, but their behaviour in the current cycle has temporarily shifted.
"In periods of acute stress, markets prioritise liquidity over safety, prompting investors to sell gold—one of the most liquid assets—to raise cash. This creates a short-term disconnect where gold falls despite rising geopolitical risks. Additionally, higher real yields and a stronger dollar have increased the opportunity cost of holding non-yielding assets like gold and silver, further pressuring prices.
"Geopolitical tensions are also fuelling inflation, reinforcing central bank hawkishness rather than supporting gold," she said.
However, she emphasised that "this is a cyclical, liquidity-driven phase, not a structural shift. Central bank buying, fiscal concerns, and long-term currency debasement continue to underpin the role of gold and silver as strategic safe-haven assets over the medium to long term."
Echoing similar views, Saumil Gandhi, Senior Analyst—Commodities at HDFC Securities, said that since the US-Israel war on Iran escalated late last month, precious metal prices have witnessed consistent weakness, declining week after week.
"From the recent peak on March 2, spot gold has corrected by around 24%, while the more volatile silver has fallen sharply by over 36%. Traditionally, gold and silver are considered safe-haven assets during periods of uncertainty, but in the present instance, their prices have diverged from that expectation due to a significant shift in the macroeconomic environment," Gandhi said.
He added that the war-driven spike in energy prices has heightened global inflation concerns, altering market expectations around monetary policy—from an earlier dovish outlook to a more hawkish stance.
"As a result, US Treasury yields and the US dollar have strengthened, creating a challenging environment for non-yielding assets like gold and silver.
"Investors have shifted funds from precious metals to interest-bearing assets, triggering significant sell-offs and continued outflows from gold-backed ETFs, indicating weakening investment demand," he said.
Gandhi also noted that markets are increasingly pricing in tighter monetary policy, with expectations of a US Federal Reserve rate hike rising to around 50% by October, further weighing on bullion.
"Looking ahead, if the war persists, the focus may shift towards global growth risks or a potential recession, which could eventually revive demand for gold in the long term. However, in the near term, volatility is likely to remain elevated and prices may continue to face downward pressure," he added.
Anindya Banerjee, Head of Commodities and Currency Research at Kotak Securities, said gold and silver have not lost their safe-haven character, but their recent price behaviour is being driven more by global liquidity dynamics than traditional risk aversion.
"The market is currently facing a dollar liquidity squeeze, driven by elevated energy prices and rising US bond yields. This has increased global demand for dollars and tightened financial conditions. In such phases, investors are compelled to raise cash and reduce leverage, leading to selling even in traditional safe-haven assets like gold," he said.
He added that the current decline should not be seen as a failure of gold's hedge properties, but as a phase where liquidity stress is temporarily overriding its safe-haven appeal.
Silver, meanwhile, is underperforming gold due to its dual role as both a monetary and industrial metal. With higher energy prices weighing on global growth expectations, the outlook for industrial demand weakens, adding further pressure on silver.
From a broader perspective, Banerjee said this phase represents a cyclical, liquidity-driven correction rather than a structural shift. "The underlying drivers—reserve diversification, macro uncertainty, and de-dollarisation trends—remain intact. Such corrections often create strategic opportunities for long-term investors, with a focus on portfolio allocation rather than short-term price momentum," he said.
Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, meanwhile, blamed the fall in gold prices on rising inflation concerns and expectations of higher interest rates, even as the US-Israel war on Iran shows no signs of easing.