Gold dropped 2.5% below $4,680 and Silver fell by 3.8% last week, while the US dollar closed above 100 level following stronger-than-expected jobs data — reviving expectations of the Fed keeping rates higher for longer.

Prices have extended losses from the previous session after President Donald Trump issued a fresh ultimatum to Iran and warned of strikes on its power plants and other civilian infrastructure if the Strait of Hormuz is not reopened. Tehran has rejected the latest ultimatum and continues to carry out attacks on energy assets across the Middle East.

Geopolitical Tensions (Primary Driver)

The dominant theme this week was the US–Israel–Iran war, now in its fifth week. Bullion prices were extremely volatile — rallying when ceasefire hopes emerged, then reversing sharply when Trump signalled the US would continue military action against Iran in the coming weeks. Two US Air Force jets were shot down last week — one F-15E over central Iran and a second near the Strait of Hormuz.

Dip-buying was triggered earlier in the week after Trump extended the ceasefire deadline, improving short-term sentiment, but uncertainties persisted as Iran rejected the US peace proposal and asserted control over the Strait of Hormuz.

Trump set an April 7 – 8PM EST (April 8 – 5:30 AM IST) deadline for Iran to reopen the Strait of Hormuz, warning “time is running out.” Iranian military commanders responded by threatening that “the gates of hell” would open if infrastructure strikes continue.

Adding to this, Tehran also outlined a new condition and said that the transit through the strategic waterway could resume if part of the revenue is allocated to compensate Iran for war-related damages.

Dollar Index & Bond Market

The US dollar closed above the 100 mark after stronger-than-expected US jobs data on Friday, reviving expectations of the Fed keeping rates higher for longer — a headwind for precious metals. The tug-of-war between geopolitical safe-haven demand and 4.5% bond yields emerged as the defining macro theme, with gold being sold to cover losses in other sectors as yields surged. Gold and silver fell sharply on Thursday amid gains in the USD Index and an uptick in bond yields.

Market Sentiment & Volatility

Traders remained cautious and preferred waiting for stable price levels before making fresh purchases. The SPDR Gold Shares (GLD) reported notable ETF outflows as institutional portfolios rebalanced. Gold’s correlation to the S&P 500 reached nearly +0.90 at certain points this year — a sign of growing “financialization” that makes it vulnerable during broad market selloffs.

Central Bank Activity & ETF Demand

Structural central bank demand — averaging ~190 t/quarter — continued to provide a price floor. China and other emerging-market central banks remained consistent buyers, with the dollar’s share of FX reserves near a 30-year low, boosting reserve diversification.

Global central bank gold purchases slowed in January 2026, with only 5 tonnes acquired compared to a monthly average of 27 tonnes in 2025. Countries like Malaysia and South Korea resumed buying, but the Bank of Russia was the largest seller (9 tonnes). China continued increasing its reserves. US 2-year real TIP yields have fallen nearly 20bps year-to-date, supporting ETF demand. North American gold ETF flows remain resilient with capacity for further accumulation.

Retail & Physical Demand

Domestic jeweller demand ahead of India’s festive and wedding season provided price support on MCX, helping gold and silver hold above key levels during dips. Strong physical buying from China was also a bullish factor, with February silver imports reportedly hitting an eight-year high in the first two months of 2026.

India Imposes Import Curbs on Gold, Silver & Platinum Jewellery

The Indian government announced curbs on imports of gold, platinum, and silver jewellery with immediate effect on April 1, 2026, aimed at checking misuse of free trade agreements (FTAs). In a notification issued by the Directorate General of Foreign Trade (DGFT), the import policy for items— covering articles of jewellery made from precious metals — has been revised from “Free” to “Restricted.” Importers will now require prior approval or licences for shipments.

Over the past year, the government had periodically tightened controls — platinum jewellery imports were restricted until April 2026, and silver jewellery faced curbs from September 2025 to March 2026. The current move expands these controls to all forms of gold, silver, and platinum articles. Imports by 100% Export Oriented Units and units located in Special Economic Zones remain exempt from the new restrictions. The move is structurally bullish for domestic gold and silver prices on the MCX, as it tightens the supply of imported jewellery and removes a channel through which cheaper FTA-route metal was undercutting domestic players.

Going ahead this week, US-Iran deadline, US GDP data and FOMC meeting minutes would be eyed for price momentum. Gold prices are expected to trade in the range of $4580 (~Rs 144,000) to $4800 (~Rs 154,000) this week. Silver is expected to trade in the range of $67(~ Rs 215,000) to $77(~Rs 242,000) this week.

Dr.Renisha Chainani, Head- Research, Augmont