US-Iran War: Why gold and silver prices are slipping while crude oil is surging — Explained

The conflict between the US-Israel bloc and Iran is now starting to shake global markets, with crude oil right at the centre of it. As tensions rise in the Gulf, the biggest worry is the Strait of Hormuz -- a narrow route through which nearly a fifth of the world’s oil and gas supplies pass normally.

Even the risk of disruption here has pushed crude prices to multi-year highs. What was earlier seen as a far-fetched idea -- crude oil at $200 per barrel -- is now being discussed more seriously across markets.

If prices rise sharply from here, the impact won’t be limited to energy. It could push up inflation, force central banks to stay cautious, and shift investor money towards safer assets, say analysts. For India, which imports close to 90 per cent of its crude needs, the impact could be much wider from inflation to the rupee and overall market sentiment, they add.

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Why is crude oil fuelling global uncertainty again?

The latest phase of the US-Iran conflict has brought supply concerns back into focus. The Strait of Hormuz remains the key pressure point because of its role in global oil movement.

If the situation worsens and supply is disrupted for a longer period, markets could lose up to 15 million barrels per day. That kind of shock is rare and difficult to manage, which is why prices have already started to react.

Crude is now close to four-year highs, and the $150-$200 range is no longer being dismissed outright.

Strategic reserves may help in the short term, but they are not enough to handle a prolonged disruption of this scale.

Can crude oil really hit $200 per barrel?

It still depends on how the conflict unfolds, but markets are no longer ignoring the possibility.

Strikes near key Iranian oil facilities have added to the uncertainty. Even if tensions ease later, bringing supply back to normal levels will take time. Restarting production is not instant - especially if wells remain shut for weeks.

At the same time, global demand is still above 100 million barrels per day. If supply tightens, prices will have to rise to balance things out.

Gold, silver price today: Why is bullion under pressure?

Interestingly, gold and silver have not rallied much despite rising tensions.

As of March 19, spot gold was around $4,836 per ounce, down over one per cent, while silver fell more than 2 per cent to about $75.75 per ounce. For the month, gold is down roughly 4 per cent and silver has corrected sharply. The reason is simple - interest rates.

The US Federal Reserve has kept rates steady at 3.50-3.75 per cent and signalled that it will stay cautious because of inflation risks linked to oil. Higher rates reduce the appeal of gold, which does not offer returns like bonds or deposits.

So even though geopolitical risk is high, gold is not getting a free run.

MCX gold, silver rates today

In India, MCX prices are mirroring the same trend, though the rupee also plays a role.

As of 3 pm on March 19, gold was trading at Rs 1,47,078 per 10 gram, while silver was at Rs 2,31,864 per kg.

Since India imports both crude oil and gold, any pressure on the rupee -- especially due to higher oil prices -- can influence domestic bullion rates.

A weaker rupee may support gold prices locally even if global prices remain soft.

On COMEX, gold has slipped below the important $4,800 level, which was acting as a key support. The next levels to watch are around $4,700 and then $4,650.

Silver is hovering close to $70 per ounce. If it breaks below this level, it could fall further towards $63.

These levels matter because they will decide whether bullion stabilises or sees more downside in the near term.

Why is gold falling despite rising tensions?

Normally, conflicts like this push gold higher. But this time, interest rates are playing a bigger role.

The US central bank is not in a hurry to cut rates. Inflation is still above comfort levels, and rising oil prices could keep it elevated. Strong economic data has also reduced expectations of quick rate cuts.

So gold is stuck between two forces - support from global uncertainty and pressure from higher interest rates.

What do rising oil rates mean for India and global markets?

For India, higher oil prices can create multiple problems. They can widen the current account deficit, weaken the rupee, and push up inflation.

Globally, equity markets - especially in oil-importing countries - could face pressure. At the same time, commodities like oil and precious metals will stay in focus.