Gold vs silver: When conflicts strike and the geopolitical situation turns dire, investors often flock to precious metals like gold and silver. Ideally, the recent war between the US and Iran should have elicited the same reaction. But this time the playbook has flipped.
Gold prices indeed have risen, but silver has taken a knock. Interestingly, the rise in gold rate is also capped.
Firstly, let’s look at the data. The trend in the domestic spot market as of close on March 5 indicates that silver has dipped over ₹3400 per kilogram to ₹2,62,595 from ₹2,66,127 at the beginning of the conflict on February 28. At the same time, gold has eked out a gain of around ₹1500 as the rally fizzled post hitting ₹1,67,000 per 10 grams.
Why is silver rate falling amid geopolitical tensions?
Before exploring what’s limiting gains for gold, let’s understand why silver is failing to act like a safe haven. The answer lies in its status as industrial metal.
Approximately half of silver’s demand comes from industrial applications — including electronics, solar panels, EV components, and manufacturing processes, explained Nirpendra Yadav, Sr. Commodity Research Analyst at Bonanza.
When geopolitical tensions threaten global supply chains or industrial production, expectations for silver’s industrial demand weaken, which creates a divergence, he added.
Additionally, silver prices need to be viewed in the light of the sharp gains of the last two years. Silver has jumped more than 150% during 2025 and reached record highs already in early 2026. This leaves investors wanting a more compelling reason to lap up the precious metal, while profit-taking continues.
“Gold is once again asserting its dominance as the primary safe-haven asset. Silver remains valuable — but its industrial exposure makes it more vulnerable during periods of war-driven uncertainty,” Yadav opined. If tensions escalate further, gold is likely to continue outperforming, and if growth stabilises and industrial demand rebounds, silver could regain leadership, he added.
The general volatility in silver is higher compared to gold. Hence, gold is rising while silver is not. In the current scenario, a 60:40 ratio should be allocated for gold and silver, said Prathamesh Mallya, DVP Research – Non Agri Commodities at Angel One Ltd
The US-Iran war has rekindled interest in the US dollar. The dollar index is hovering at three-month high as an escalating conflict in the Middle East kept investors jittery and drove demand for safe-haven assets.
A stronger US dollar and expectations that the US Federal Reserve may keep interest rates higher for longer have also reduced the appeal of non-yielding assets like gold and silver. This also explains why the gold prices have also failed to rise meaningfully.
Limited upside for gold!
NS Ramaswamy, Head of Commodity & CRM, Ventura, said the inflationary consequences of the conflict — higher oil prices — are working against gold by pushing real yields higher. A stronger US dollar and higher borrowing costs are both typically negative for bullion.
Gold’s price direction is on competing forces – geopolitical uncertainty, safe haven, versus macroeconomic headwinds stemming from dollar strength and elevated yields, said Ramaswamy.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
