Gold prices rebound above Rs 1,44,000, silver near Rs 2,36,000: Why bullion is rising despite strong dollar, high interest rates

Gold and silver prices staged a sharp recovery on March 25, with gold trading above Rs 1,44,800 per 10 grams and silver near Rs 2,36,500 per kilogram on the Multi Commodity Exchange (MCX) as of 5 pm, even as global conditions remain unfavourable for precious metals. The rebound comes after one of the steepest corrections in recent decades, driven by a mix of geopolitical uncertainty around the US–Iran conflict, a softer US dollar, and easing crude oil prices. However, the broader trend remains complex: while safe-haven demand and value buying are supporting prices in the short term, higher-for-longer interest rates and a strong dollar continue to cap any sustained rally. The latest Motilal Oswal report highlights that bullion is now caught between conflicting global signals, making the current price movement both fragile and highly reactive.

Why did gold and silver prices rise on March 25?​

The latest rally in bullion prices is largely driven by a combination of short covering, value buying after a steep fall, and improving global cues.

Add Zee Business as a Preferred Source

Gold rose nearly 4 per cent intraday, while silver saw a sharper rebound of over 5 per cent. This recovery follows a significant correction phase, which had pushed investors to re-enter the market at lower levels.

A key trigger was the weakening of the US dollar, which makes gold cheaper for global buyers. At the same time, crude oil prices softened after reports suggested a possible easing of tensions between the United States and Iran. Lower oil prices reduce inflation concerns, which in turn eases pressure on central banks to keep interest rates elevated - a positive signal for bullion.

US–Iran tensions: How geopolitics is driving volatility?

Geopolitical developments remain a major factor influencing gold prices.

Markets reacted to reports of a possible ceasefire framework between the US and Iran, along with comments from US President Donald Trump indicating “productive” discussions. Although Iranian officials denied direct negotiations, the mixed signals were enough to boost investor sentiment temporarily.

Such uncertainty typically increases demand for safe-haven assets like gold. However, in this case, the impact has been uneven. While geopolitical risks support prices, they have also driven energy prices and dollar demand higher in recent weeks - factors that had earlier pushed bullion lower.

Why gold fell sharply before this rebound?

Despite being a traditional safe-haven asset, gold has struggled during the recent phase of geopolitical conflict.

Since late February, gold prices have fallen about 16 per cent, while silver has dropped nearly 26 per cent. The correction erased a large portion of the gains made earlier this year.

The main reasons include:

• A sharp surge in the US dollar due to global risk aversion
• Rising bond yields, making interest-bearing assets more attractive
• Panic selling and fresh short positions in the market

In fact, gold had declined around 21 per cent from its peak of $5,595 per ounce to nearly $4,400 earlier this week, while silver dropped about 43 per cent from its lifetime high.

Stronger dollar and high rates: The biggest hurdles

Even as prices rebound, the broader macroeconomic environment remains unfavourable for gold.

A strong US dollar continues to limit upside in bullion, as it increases the opportunity cost of holding non-yielding assets like gold. Additionally, persistent inflation concerns - fuelled earlier by rising energy prices have strengthened expectations that global interest rates will remain elevated for longer.

Higher interest rates reduce the appeal of gold because investors tend to shift towards assets that offer better returns, such as bonds.

Motilal Oswal view: Bullion caught between two forces

According to Motilal Oswal’s latest report, gold is currently being pulled in two opposite directions.

On one hand, geopolitical tensions and safe-haven demand are providing support. On the other, macroeconomic factors such as currency strength and interest rate expectations are acting as headwinds.

This has resulted in highly volatile price action, where sharp rallies are often followed by quick corrections.

Will gold and silver keep rising? What investors should expect

MOFSL believe that while a short-term recovery is possible, a strong breakout above previous highs may be difficult. In the near term:

• Prices may remain range-bound and volatile
• Geopolitical developments will continue to drive sentiment
• Dollar movement and interest rate outlook will remain key triggers