Precious Metals in a Geopolitical Crisis: Gold and Silver Outlook Amid the US–Israel–Iran Conflict

1. Executive Summary

Geopolitical conflicts, such as the ongoing US-Israel-Iran war that began on February 28, 2026, typically drive safe-haven demand for precious metals, leading to price rallies amid heightened uncertainty. Gold prices have surged above $5,100–$5,300 per ounce in recent volatility, reflecting investor flight to safety, while silver has climbed to around $84 per ounce, balancing safe-haven appeal with industrial pressures. The relationship between war, inflation, and safe-haven demand is evident: conflicts often disrupt energy markets, boosting inflation expectations and prompting capital shifts into stores of value like gold and silver.

Key insight: Gold and silver typically rally during geopolitical crises as investors move capital into perceived stores of value, especially when financial markets face uncertainty, though short-term volatility can arise from dollar strength and rate expectations. Scenario analysis suggests stabilization could see gold at $4,800–$5,300 and silver at $70–$90, while escalation risks $6,000–$7,500 for gold and $120–$180 for silver, driven by risk-off flows and inflation fears.

2. Gold as a Global Safe Haven

Gold serves as a premier safe-haven asset due to its intrinsic value, liquidity, and historical resilience during crises. As a store of value, it preserves purchasing power amid currency debasement and economic turmoil. Central banks have accelerated reserve accumulation, with net purchases reaching 1089 tonnes in 2024, doubling early-decade levels, as a hedge against fiat volatility. It acts as a currency hedge against dollar fluctuations, particularly when US rates rise or geopolitical risks mount. Demand surges during wars and shocks, as seen in historical spikes.

Historical examples:

• 1973 Oil Crisis: Gold quadrupled amid inflation surge.

• Gulf War (1990): Brief spike to $400/oz.

• Global Financial Crisis (2008): Rose 25% as equities fell.

• Russian Invasion of Ukraine (2022): Surged over $2,000/oz.

Charts

• Gold Price During Major Geopolitical Events:

Central Bank Gold Purchases (Last 20 Years):

3. Silver – The Hybrid Metal

Silver differs from gold due to its dual role: safe-haven asset and industrial commodity, making it more volatile. Safe-haven demand mirrors gold during crises, but industrial uses—solar panels (120-130 Moz/year), electronics, EVs (70-75 Moz in 2026), manufacturing—drive over 55-60% of consumption. Silver's volatility exceeds gold's, often outperforming in commodity bulls due to industrial leverage.

Chart

• Gold-Silver Ratio (50-Year History):

4. Impact of the US–Israel–Iran Conflict

Escalation drives safe-haven flows, shifting capital from equities to gold, silver, dollar, and bonds. Gold climbed over 2% post-strikes, surging to $5,300+. Oil shocks transmit via rising prices, inflating expectations and currency volatility, boosting gold as hedge. Higher oil historically elevates gold demand. Gold is sensitive to real rates (negative correlation), dollar strength, and policy; conflict may lower rates, supporting prices.

Gold vs real yields: Negative, with 100bp rise historically dropping gold 18%. Gold vs USD index: Inverse.

5. Supply and Demand Dynamics

Gold Supply

Mining production hit 3672 tonnes in 2025, with recycling and central bank demand key. Top producers: China (~390t), Australia (320t), Russia (305t), Canada (200t), US (160t).

Silver Supply

Mining supply stable, but industrial demand growth in PV/solar (declining 2% to 650 Moz in 2026) and EVs drives deficits.

Charts

• Global Silver Industrial Demand:

6. Price Forecast Scenarios

Scenario 1 – Conflict Stabilizes

No expansion; gold $4,800–$5,300, silver $70–$90. Drivers: Reduced haven demand, stronger dollar, stable energy.

Scenario 2 – Prolonged Regional Conflict

Persistent tension; gold $5,300–$6,200, silver $90–$120. Drivers: Inflows, oil rises, inflation.

Scenario 3 – Major Escalation

Wider conflict; gold $6,000–$7,500, silver $120–$180. Drivers: Risk-off, bank accumulation, instability.

7. Macro Impact

Precious metals hedge inflation, with gold outperforming by 3% annually over 40 years. Monetary responses to crises lower rates, supporting prices. Commodity cycles and capital flight enhance role during turmoil.

Chart

• Gold vs Inflation (50 Years):

8. Investment Implications

Position via physical gold, ETFs (GLD, SLV), mining stocks (leverage effect: outperform metal in bulls). Hedge against debasement, crises, inflation.

9. Risks to the Bullish Thesis

Downsides: Strong USD, rising real rates, de-escalation, liquidity shocks.

10. Conclusion

Gold and silver remain core assets in crises. The conflict highlights energy, inflation, stability influences on prices. Long-term bullish due to bank accumulation, fragmentation, demand.

Gold vs Real Interest Rates:

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