Profit booking: Gold falls Rs 4,300, Silver down Rs 17,000 even as US-Iran conflict escalates. What should investors do?

Gold and silver prices fell sharply in the evening session on MCX on Tuesday, as investors booked profits following a recent surge driven by escalating tensions in West Asia. Trading was limited to the evening session due to Holi, with domestic exchanges closed during the day.

Gold futures on MCX were trading at Rs 1.66 lakh per 10 grams, down Rs 4,355 or 2.56%. Silver futures declined more steeply, falling Rs 17,281 or 6% to Rs 2.61 lakh per 100 grams.

The decline comes after a sharp rally on Monday, when safe-haven demand spiked following the widening conflict between the US, Israel and Iran. Concerns over potential disruption in the Strait of Hormuz, through which about 20% of global oil shipments pass, had pushed investors toward defensive assets such as gold and silver.

However, with markets attempting to assess whether the conflict will be prolonged or contained, some of the risk premium in precious metals appears to be cooling.

Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said the coming week remains heavy on US macroeconomic data, which could add further volatility to gold prices.

“The week ahead remains data-heavy for the US, with Manufacturing and Non-Manufacturing PMI, ADP Non-Farm Employment Change and Unemployment data lined up, all of which could inject further volatility into prices as participants reassess Fed policy expectations,” he said.
From a technical perspective, Trivedi said gold continues to maintain a strong bullish structure as long as it holds above Rs 1,64,000, which now acts as a crucial support zone. “On the higher side, Rs 1,72,000 remains the immediate resistance; a sustained break above this level could open the path for further upside momentum. Volatility is expected to stay elevated given geopolitical risks and macro data triggers,” he added.Ponmudi R, CEO of Enrich Money, said gold is currently in short-term consolidation but retains a positive bias. “Robust buying interest persists in the Rs 1,58,000–1,62,000 demand band following the recent surge driven by Middle East tensions,” he said.

According to Ponmudi, a sustained hold above the recent base and a breakout above Rs 1,65,000 could revive momentum toward Rs 1,70,000–1,75,000, preserving a bullish medium-term outlook.

Silver, which tends to be more volatile than gold, saw sharper selling pressure. Ponmudi said key support for silver is placed in the Rs 2,50,000-2,70,000 range. “A sustained hold above this region could trigger recovery toward Rs 3,20,000-3,30,000,” he said. However, a decisive breakdown below this zone could accelerate downside pressure.

Analysts say the outlook for precious metals will depend on two key factors in the near term: the trajectory of the US-Iran conflict and incoming US economic data that could shape expectations around Federal Reserve policy.

If geopolitical tensions intensify further or crude oil prices spike again, safe-haven flows into gold and silver could resume. Conversely, signs of de-escalation or stronger US data could strengthen the dollar and cap gains in precious metals.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)