Khamenei’s death, which was confirmed by Iranian state media this morning, prompted warnings of severe retaliation from Tehran. US President Donald Trump announced that the 86-year-old leader was killed on the first day of the extensive joint airstrikes.
Geopolitical tensions are creating a sense of risk aversion, driving investors away from equity markets and into safer assets like gold and silver. Precious metals saw a record bull run earlier this year, rallying sharply amid Trump’s tariff flip-flops and other uncertainties, before seeing some correction.
Expect volatility in precious metals
Gold and silver prices remain highly volatile with a gap in tomorrow’s opening session as the Middle East conflict, which includes US and Israeli military action against Iran, continues to weigh on global risk sentiment, said Jatin Trivedi, VP Research Analyst – Commodities and Currencies, LKP Securities.
“The sharp escalation of hostilities, coupled with coordinated attacks and retaliatory moves, is causing uncertainty and diminishing hopes for a quick diplomatic solution. This heightened geopolitical risk could push investors toward traditional safe havens like gold and silver, and expect a broader bull market to open,” he said.
As global equities and risk assets come under pressure, capital is turning to precious metals, which act as a hedge against uncertainty, the analyst explained. “Early moves have already lifted gold and silver prices in recent sessions, and the move could continue if the war escalates. Energy markets are also reacting, with crude oil prices rising on fears of supply disruptions through key routes like the Strait of Hormuz, further increasing risk appetite.”
Also read: The price of crude oil exceeded 100 dollars? What do the experts predict after the US and Israeli attack on Iran?
Profit booking to follow?
However, the effect may not be the same. If there are signs of diplomatic progress or signs of a slowdown, the precious metal could take gains after an initial spike of 3-6%, Trivedi said.
“We expect the ongoing rally in US Treasuries, oil, gold and silver to extend. For India, the impact is generally greater: higher crude oil prices widen the current account deficit, suppress domestic inflation, pressure the rupee, and may lead to FII withdrawals as global investors reduce their risk exposure,” Nachikita Fenerir Bharat, Art Fenerir Bhardwaj, Multicart Bharadrat.
Gold prices hit a one-month high on Friday, trading at $5,230.56 an ounce. The US gold price for April settled at $5,247.90. The increase marked a 7.6% gain for February this year.
Silver also rose, with the spot price rising 4.8% to $92.60 an ounce, recording a monthly gain of 9.7%. Platinum rose to $2,350.34 an ounce, while palladium fell slightly to $1,775.31.
Bears are likely to take control of Dalal Street
Indian capital markets are expected to see a gap-down opening tomorrow amid growing uncertainty. Ashish Anand, Partner at Fortuna Asset Managers, said that financial markets are likely to experience risk aversion behavior along with foreign FIIs as market prices experience sharp and rapid price swings during the day.
Will Sensex and Nifty react to Middle East war after Khamenei’s assassination?
“Our advice to investors is simple: avoid fear-led decisions. Businesses should implement volatility as a strategic tool, which should be managed carefully. People who want to invest for the long term should run their Systematic Investment Plans (SIP) and allocate their money among reliable, strong and fundamentally strong companies. One needs to follow all these rules, including the rules of gold, stocks and bonds. Help through unpredictable market times. We believe that wealth is created through discipline, not reaction and the key theme will be “Patience over momentum,” Ashish Anand, Partner, Fortuna Wealth Managers.
(Disclaimer: The suggestions, recommendations, views and opinions given by the experts are their own. They do not represent the views of The Economic Times)
