From Ceasefire Hope to Blockade Fear — Bullion’s Whipsaw continues

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Gold and silver are under pressure at the start of this week, reversing last week’s gains. The trigger is a sharp escalation in the US-Iran standoff — with Washington announcing plans to blockade the Strait of Hormuz following the collapse of weekend peace talks in Pakistan.

The move has reignited global energy crisis fears and pushed safe-haven demand into a conflicted zone: while geopolitical risk remains high, rising energy-driven inflation and the prospect of tighter monetary policy are creating headwinds for non-yielding assets like gold and silver.

Geopolitical developments

Weekend negotiations in Islamabad broke down without agreement. The US accused Tehran of refusing to curb its nuclear programme, while Iran’s demands were wide-ranging — including control over the Strait of Hormuz, war reparations, a regional ceasefire, and access to frozen overseas assets. With no diplomatic resolution in sight, the effective shutdown of this critical global shipping chokepoint has driven energy prices sharply higher. The escalation significantly increases the risk of a prolonged conflict with deep macroeconomic consequences.

Last week was almost entirely driven by US-Iran war developments. Gold prices on COMEX jumped as much as 3% to move above $4850 on Wednesday after Trump and Iran agreed to a two-week ceasefire, adding to a 1.2% gain in the previous session while Silver prices climbed nearly 6.8% to $76.92.

However, the rally was short-lived. Israeli attacks on Lebanon raised concerns over the stability of the US–Iran ceasefire, causing gold to slip below the ₹1.52 lakh mark on MCX, while silver hovered around ₹2.35 lakh per kilogram. 

Macroeconomic Signals

US inflation data confirmed the war’s economic impact. The annual inflation rate in the US jumped to 3.3% in March 2026, the highest since May 2024 — a sharp increase from 2.4% in February — primarily driven by energy costs rising 12.5%, with gasoline up 18.9% and fuel oil up 44.2%, due to the Iran conflict. 

The Strait shutdown is now a direct inflation catalyst. Surging energy costs are feeding through to broader price pressures, reinforcing market expectations that major central banks — including the US Fed — may delay rate cuts or even consider further tightening. This hawkish policy repricing is the primary near-term headwind for gold and silver, as rising real interest rates increase the opportunity cost of holding non-yielding precious metals. However, if the situation deteriorates further into a full-scale energy crisis, gold’s safe-haven premium could reassert itself sharply.

Dollar Index & USDINR

The dollar index remained below 99 on Friday and was on track to fall more than 1% for the week, as the two-week US-Iran ceasefire drove a sharp drop in oil prices and eased concerns over resurgent inflation. A weaker dollar provided additional tailwind for gold and silver by making dollar-denominated commodities more affordable globally. For Indian markets, rupee stability kept MCX price gains broadly in line with COMEX movements, with no significant currency-driven divergence during the week.

ETF Flows — A Key Concern

ETF data revealed a significant divergence this week. North America recorded sizeable outflows of $13 billion in March — the largest monthly outflow on record — ending a nine-month streak of inflows. Several drivers reversed course: risk-off conditions triggered by Operation Epic Fury weighed on most asset classes, and CTAs with elevated long positioning amplified downside price momentum. However, Eastern inflows partially counterbalanced Western outflows, keeping global gold ETF flows in positive territory for a seventh consecutive quarter overall. Going forward, falling front-end yields historically coincide with strong inflows into gold-backed ETFs — if the 2026 easing trajectory becomes more firmly priced, a familiar feedback loop of lower real rates, higher ETF holdings, and upward price pressure could re-emerge.

Central Bank Buying

Central bank accumulation remained a structural support. Although global central bank gold purchases slowed in January 2026 to 5 tonnes compared to a monthly average of 27 tonnes in 2025, the key trend was demand spreading across more regions — countries inactive for a long time, including Malaysia and South Korea, resumed increasing reserves. China continued to increase its gold reserves. Poland and China were notable buyers earlier in the month, reinforcing the institutional demand floor.

Retail & Physical Demand

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