Gold and silver have started the week on a strong footing, a move that was widely anticipated as investors rushed toward traditional safe-haven assets amid a sharp escalation in geopolitical tensions in West Asia. Coordinated military strikes by the US and Israel on Iran over the weekend have significantly unsettled global markets, heightening fears of a broader regional conflict.

The situation intensified further after Iran’s Islamic Revolutionary Guard Corps (IRGC) announced the closure of the Strait of Hormuz, a critical global oil transit chokepoint. Iran also reportedly launched retaliatory attacks on US-linked assets across several neighboring countries, including the UAE, Bahrain, Qatar, Saudi Arabia, Kuwait, Jordan, Iraq, and Syria. The risk of a prolonged and multi-front conflict has reinforced safe-haven demand, pushing gold back above the $5400 mark.

In times of heightened uncertainty, investors tend to increase allocations to bullion — and the current environment is no exception. With geopolitical instability rising, global debt levels elevated, and policymakers navigating an increasingly complex macro landscape, gold and silver remain structurally supported. Market participants are not exiting positions; rather, they are using price dips as opportunities to accumulate.

Silver, meanwhile, has crossed the $97 level, setting up a potential extension toward fresh highs. The rally is underpinned by a persistent multi-year supply deficit, strong industrial demand from electric vehicles, AI infrastructure, and solar energy, as well as renewed investment inflows and geopolitical risk premiums.

Two emerging developments could further tighten the silver market. First, China — the world’s largest silver consumer — has accelerated post-Lunar New Year restocking of silver and copper. Amid trade tensions and inflation concerns, China appears to be strategically stockpiling key metals to secure supply chains for its manufacturing base, particularly in EVs and renewables. Export controls and proactive inventory accumulation signal concerns over future availability.

Second, Mexico — the world’s largest silver producer — accounts for roughly a quarter of global output, with a significant portion of mines located in regions affected by cartel-related violence. Any escalation in disruptions could materially impact production and logistics, potentially triggering a supply shock in an already tight market.

Going forward, geopolitical headlines will remain the dominant driver of sentiment, although upcoming US macroeconomic data will provide additional trading cues. Comments from US President Donald Trump suggesting the conflict could persist for several weeks add to uncertainty. Elevated oil prices, driven by fears of supply disruptions, may further stoke inflation risks — a backdrop that historically reinforces demand for precious metals. In the current environment of conflict risk, inflation concerns, and fiscal imbalances, gold and silver continue to benefit from their enduring role as strategic portfolio hedges.

After decisively breaking above the key resistance level of $5,250 (~ ₹1,60,000), gold has resumed its upward trajectory and is now targeting $5,450 (~ ₹1,70,000) followed by $5,600 (~  ₹1,80,000) in the near term. The breakout signals renewed bullish momentum, with strong technical support now placed at $5,200 (~ ₹1,58,000). As long as prices sustain above this zone, dips are likely to attract fresh buying interest.

Similarly, silver has confirmed a breakout above the important $95 (~ ₹2,93,000) resistance level, paving the way for a rally toward $100 (~ ₹3,10,000) and subsequently $105 (~ ₹3,25,000). The broader structure remains constructive, with strong support established at $85 (~ ₹2,65,000). Holding above this support keeps the bullish outlook intact and favors further upside momentum.

Dr.Renisha Chainani, Head- Research, Augmont