Gold and Silver Slip Despite War Tensions: Markets Question Safe-Haven Momentum By Amit Gupta - Kedia Advisory
Gold dropped around 3% and silver prices have declined near 11% in a week despite geopolitical tensions that typically support safe-haven demand. The market’s weak response suggests the war premium may already be priced in, as the U.S.–Iran conflict has persisted for nearly a year. Higher exchange margins have reduced leveraged trading, limiting bullish momentum. At the same time, global equity market weakness has triggered cross-asset liquidation, prompting investors to sell bullion to cover losses. Investor preference for higher-return assets has also reduced inflows into precious metals. Additionally, central bank gold purchases have slowed sharply, and a stronger U.S. dollar near the 99.25 level has further pressured bullion by making it more expensive for international buyers.
Key Highlights
* Gold dropped around 3% and silver prices have declined near 11% in week despite geopolitical.
* Markets expected a sharp rally after Friday’s close, but prices failed to sustain above the $5400 level.
* The prolonged US–Iran conflict may have already been priced into the market, reducing the “war premium.”
* Higher exchange margins and the absence of leveraged money have limited bullish participation.
* Weak central bank buying and a stronger dollar have further pressured bullion sentiment.
Gold dropped around 3% and silver prices have declined in a week, surprising many participants who typically expect precious metals to rally during periods of geopolitical conflict. Historically, wars and geopolitical uncertainty have provided strong support to bullion as investors shift toward safe-haven assets. However, despite ongoing tensions and expectations that the market would rally sharply after Friday’s close, prices struggled to move higher and failed to sustain levels around $5400.
The lack of upward momentum suggests that multiple structural factors are weighing on the bullion market, offsetting the usual demand created by geopolitical uncertainty.
One of the primary reasons being discussed among market participants is the possibility that the war premium has already been discounted. The ongoing tensions between the United States and Iran have been present for nearly a year. Because markets have had time to process these risks, the conflict may no longer be viewed as a fresh catalyst for safe-haven buying, limiting strong inflows into bullion.
Another factor affecting the market is the increase in exchange margins. Higher margins raise the cost of holding futures positions, reducing leveraged participation. With less speculative and leveraged money in the market, rallies often struggle to gain momentum.
At the same time, weakness in global equity markets has also influenced bullion trading dynamics. The recent equity sell-off has triggered liquidation across multiple asset classes, where investors sell liquid assets—including bullion—to cover losses or reduce portfolio exposure.
Investor behavior is another contributing factor. Some market participants are avoiding bullion due to perceived lower return potential compared with other assets. When alternative markets appear more attractive, capital tends to shift away from precious metals.
Central bank demand, traditionally a strong pillar of support for gold, has also slowed. Recent purchases reportedly declined to around 5 metric tonnes from about 27 metric tonnes earlier, indicating weaker institutional buying support.
Finally, currency movements have added pressure. The US dollar has strengthened back near the 99.25 level. Since gold and silver are priced in dollars globally, a stronger dollar makes bullion more expensive for other currency holders, reducing demand.
Taken together, these factors have created a challenging environment for precious metals. Despite geopolitical tensions, the combination of discounted war risk, higher margins, market-wide liquidation, weaker central bank demand, and a stronger dollar has kept gold and silver under pressure.
The outlook for bullion will depend on whether these headwinds ease or new catalysts emerge that can revive safe-haven demand and restore investor confidence in precious metals.
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