Geopolitical Tensions and Trade Uncertainty Fuel Gold and Silver Rally
Rising geopolitical tensions in the Middle East, coupled with renewed global trade uncertainty following recent US tariff decisions, are expected to sustain an upward trajectory for gold and silver prices in the coming week, according to market analysts. Investors are increasingly flocking to these traditional safe-haven assets amid heightened volatility triggered by fresh tariff measures and escalating global risks.
Market Participants Await Key Economic Indicators
Market participants are closely monitoring upcoming economic indicators for further directional cues. Key data points include the US Producer Price Index (PPI), consumer confidence readings, weekly initial jobless claims, and the People's Bank of China's lending rate decision. These metrics will provide critical insights into inflationary pressures and monetary policy outlooks, which directly influence precious metal valuations.
"Markets are awaiting the US producer price index (PPI), housing data, consumer confidence, regional Fed indicators, and the People's Bank of China's prime rate decision," stated Choice Broking, as quoted by news agency PTI. The brokerage firm emphasized that escalating geopolitical risks and former US President Donald Trump's decision to raise global tariffs following a Supreme Court ruling have revived trade uncertainties, thereby strengthening demand for bullion as a defensive asset.
Domestic and International Price Movements
On the Multi Commodity Exchange (MCX), silver futures surged by Rs 8,584, or 3.5 percent, over the past week, while gold advanced by Rs 981, or nearly 1 percent. "Gold prices traded in a narrow range during the week ended February 20, as MCX gold fluctuated between Rs 1.5-1.6 lakh per 10 grams. Softer US data and rising geopolitical risks pushed prices higher, with investors pricing in the possibility of rate cuts by the Federal Reserve," explained Prathamesh Mallya, DVP - Research, Non-Agri Commodities and Currencies at Angel One.
Mallya further noted that renewed tensions in the Middle East, the ongoing Russia-Ukraine conflict, and broader market volatility have driven investors towards gold as a hedge against uncertainty. "Overall, the risk-off sentiment remained in precious metals this week. We expect gold prices might move higher towards Rs 1.61 lakh per 10 grams," he added.
In international markets, Comex silver futures rose by USD 4.38, or 5.62 percent, to USD 82.34 per ounce during the week, while gold gained USD 34.6, or nearly 1 percent, to close at USD 5,080.9. Choice Broking highlighted that increased post-Lunar New Year liquidity and firm industrial demand from sectors like solar and aluminum have also supported silver's robust performance.
Supreme Court Ruling and Geopolitical Premium
"Gold ended the week on a strong note, breaking above USD 5,080 per ounce after a landmark Supreme Court of the United States ruling against global tariffs reignited volatility and safe-haven demand. The ruling, combined with mounting US-Iran tensions, has reintroduced a geopolitical risk premium that spurred silver's rebound," Choice Broking elaborated.
The brokerage added that although the US dollar initially weakened to 97.8, it rebounded after Trump announced a 10 percent global tariff through executive order, later raising tariffs to 15 percent. This move has kept investors wary and continued to support bullion prices. Additional support came from heightened tensions in the Middle East, including a significant US military deployment near Iran, which further lifted bullion's appeal, the firm concluded.
Analysts unanimously point to a confluence of factors—geopolitical strife, trade policy shifts, and anticipatory economic data—as the primary drivers behind the current bullish sentiment in precious metals. As global uncertainties persist, gold and silver are likely to remain favored assets for risk-averse investors seeking stability in turbulent times.
