Gold vs Silver: Which precious metal can outperform amid uncertainty over US-Iran war?

Gold and silver prices rallied on Wednesday following the extension of the US–Iran ceasefire, which helped ease geopolitical tensions and reduced concerns over a potential spike in inflation and a prolonged high interest rate environment.

Spot gold rose 1.1% to $4,762.22 per ounce, while US gold futures for June delivery gained 1.3% to $4,781. Spot silver prices surged 2.2% to $78.38 per ounce.

The rally in gold and silver prices came after US President Donald Trump announced an indefinite extension of the ceasefire with Iran to facilitate further peace negotiations, just hours before the deal was set to expire. The move significantly reduced near-term geopolitical risks, leading to a decline in crude oil prices, a softer US dollar, supporting precious metals.

In the domestic market, gold and silver prices on the Multi Commodity Exchange (MCX) mirrored global trends. MCX gold rate rose by ₹1,900, or 1.25%, to ₹1,53,571 per 10 grams. MCX silver prices climbed ₹5,801, or 2.37%, to ₹2,50,502 per kilogram.

Despite the synchronized rally, the outlook for gold and silver diverges in terms of risk-return dynamics. Gold continues to function as a relatively stable safe-haven asset, supported by ongoing geopolitical uncertainties, sustained central bank purchases, and its traditional role as an inflation hedge.

Silver, by contrast, offers higher return potential but is accompanied by greater volatility due to its dual nature as both a precious and industrial metal.

Gold vs Silver: Which metal can outperform?

According to Ruchit Thakur, Market Analyst at VT Markets, while real yields remain elevated, the pace of increase has slowed, providing some support to gold prices. However, silver’s strong structural demand from high-growth sectors such as solar energy, electronics, and electric vehicles enhances its medium-term appeal.

Thakur also pointed out that the gold-to-silver ratio remains elevated, indicating a potential mean reversion. Historically, in late-cycle economic phases characterized by stabilizing growth and steady gold prices, silver has tended to outperform more sharply. This dynamic suggests that silver could be better positioned over the next 6–12 months, provided global economic conditions do not deteriorate significantly.

Echoing a similar view, Vandana Bharti, Head of Commodity Research at SMC Global Securities, noted that the current geopolitical backdrop favors silver both technically and fundamentally. She explained that silver’s extensive use in industrial applications — particularly in solar panels, electronics, and advanced technologies — positions it to benefit from improving trade flows and manufacturing activity in a relatively stable geopolitical environment.

“As US-Iran tensions ease, particularly in critical regions such as the Strait of Hormuz, smoother shipping logistics and improved supply chains can accelerate industrial demand. While gold may continue to see steady gains, silver often responds more aggressively in such scenarios, effectively ‘catching up’ with a sharper rally,” Bharti said.

She added that MCX silver rate could potentially reach ₹2.75 lakh per kilogram if the ceasefire sustains and global trade flows normalize.

Kaveri More, Commodity Analyst at Choice Broking, also expects silver to outperform gold, citing both technical indicators and macroeconomic factors. With the gold-silver ratio currently around 60:1, there is scope for further narrowing. The easing of geopolitical tensions is likely to boost expectations of economic recovery, thereby increasing demand for silver in sectors such as renewable energy, electric vehicles, and technology.

More highlighted that recent market behavior reflects a shift in investor preference from gold to higher-beta silver assets, particularly amid a weakening dollar and declining oil prices. This has amplified silver’s gains, although she cautioned that the metal remains susceptible to sharp corrections if geopolitical uncertainties resurface.

“Silver typically leads in ‘risk-on’ environments following geopolitical easing, especially if lower inflation opens the door for potential rate cuts by the US Federal Reserve. Gold, on the other hand, tends to remain more stable during periods of uncertainty,” she noted.

However, not all experts are uniformly bullish on silver. Jigar Trivedi, Senior Research Analyst at IndusInd Securities, emphasized that gold remains the more reliable option for investors seeking stability. He described the current environment as a “mixed setup,” where gold represents a defensive hedge, while silver is a higher-risk, higher-reward play.

Trivedi explained that easing crude oil prices could help moderate inflation, potentially prompting the US Federal Reserve to consider rate cuts later in the year — a scenario that would be supportive for gold. While acknowledging silver’s industrial demand drivers, including applications in artificial intelligence infrastructure, electronics, and renewable energy, he believes the current macro setup still favors a bullish stance on gold.

From a medium-term perspective of four to six months, Trivedi expects MCX gold prices to rise to ₹1,70,000 per 10 grams and MCX silver price to reach ₹3,20,000 per kilogram, underpinned by a broadly positive outlook for the bullion complex.

While gold continues to offer stability and protection in uncertain environments, silver appears better positioned to outperform in a scenario of easing geopolitical tensions and improving economic activity. Investors may therefore consider a balanced approach, aligning their allocation with their risk appetite and market outlook.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.