A sharp surge in safe-haven demand following the unprecedented escalation in West Asia is likely to accelerate the prices of precious metals on Monday, analysts said. Both, gold and silver, are poised to open higher as global markets will react to the outbreak of war between the United States and Iran.
Dharmesh Bhatia, Director of Emirates Investment Bank, told NDTV Profit that the geopolitical risk premium is now the primary driver for bullion. Bhatia noted that the prices already saw a significant pre-strike surge on Friday, a day before the outbreak of a full-fledged war between Iran and the United States-Israel combine.
Gold and silver were already trending higher throughout late February due to rising regional friction. However, the military action over the weekend has fundamentally altered the technical landscape. Analysts suggest that the breach of key resistance levels in New York on Friday was merely a precursor to the volatility expected when domestic exchanges (MCX) and international spot markets resume full-scale trading.
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Given the magnitude of the geopolitical risks, gold and silver are likely to open "sharply higher on Monday", Bhatia stated. The data from Friday shows the market was already pricing in a conflict, and the weekend's events have only solidified the flight to safety, he added.
On Friday, at close of the commodity market hours, US spot silver had risen 6.19% to $93.84 an ounce, whereas the MCX silver rates rose over 5% to Rs 2.74 lakh per kilogram. Similarly, US spot gold had climbed 1.75% to $5,277.9 per ounce, and the MCX gold futures rose over 1% to nearly Rs 1.62 lakh per 10 gram.
According to Bhatia, oil futures on India's MCX are expected to climb about 5-7% on Monday, whereas in the global market, US West Taxes Intermediate futures could rise by around 3-4%.
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