Gold and Silver Jump on Iran Strike Speculation

 

Gold and Silver Jump on Iran Strike Speculation

(Bullion News Network) – Gold and silver jumped on Friday due primarily to speculation that the U.S. may begin conducting military strikes on Iran. The spot price of gold gained more than $110 per troy ounce, crossing $5,100/ozt. Silver prices increased by a greater percentage, adding over $6.20/ozt to close at just under $85 per troy ounce. The price action favored silver, driving the gold-silver ratio more than 2.5 points lower to less than 61:1. Geopolitics dominated the trading day to end the week. Experts believe that the United States may be preparing for a military strike on Iran. On Friday, U.S. President Donald Trump acknowledged to reporters that he was weighing the option of conducting strikes on Iran in order to push the country toward a deal over its nuclear program. The news comes after the American leader began strengthening U.S. military presence near Iran.

Oil prices jumped throughout the week due to the growing possibility that the U.S. may launch strikes on Iran, which could pose a supply chain issue for oil transported through the region. Gold and oil prices tend to correlate strongly, since both assets are often closely linked to inflation and the value of the United States dollar. Some analysts believe that a new set of military strikes on Iran could be more disruptive than the “12-day war,” an escalation of tensions and small military exchanges between the U.S. and Iran in June. In a statement released Friday, RBC Capital Markets argued that the next confrontation between the United States and Iran could be considerably more disruptive.

There is a significant risk that round two between Tehran and Washington will be wider and more disruptive than the 12-day war in June. Given the capture of Venezuelan leader Nicolas Maduro, Iranian Supreme Leader Khamenei will likely believe that regime change is the ultimate American/Israeli goal and will take aggressive measures to raise the cost of such an operation.

Trump frequently floated the concept of military action against Iran over the past few months. The U.S. leader has frequently criticized Iran for its violent crackdown on protests over the country’s struggling economy. In recent weeks, his attention has turned to Iran’s nuclear program; Trump has often criticized former U.S. president Barack Obama’s nuclear deal with Iran as having been too lax. Trump said on Thursday that he plans to decide how to force a new nuclear deal with Iran in the next couple of weeks. On Friday, he told reporters that he is considering using military action to attempt to force Iran to make a deal.

Safe haven assets like gold and silver tend to thrive in periods of conflict, largely because armed conflict and wars often lead to inflation through heightened government spending. Precious metals spiked during the 12-day war last June, and evolving conflicts and tensions in the Middle East often drive demand for gold and silver. Speculation that the U.S. may conduct potentially riskier strikes on Iran drove precious metal prices higher to end the trading week.

Friday’s price jump capped another volatile week in the gold and silver markets. Gold closed Friday at a weekly high of more than $5,110/ozt, up from Tuesday’s weeklong low of $4,879.43 per troy ounce. Silver prices gained on Wednesday, Thursday, and Friday after hitting the week’s low of $73.55 per troy ounce on Tuesday. The price of silver set a weekly high of $84.97/ozt on Friday as traders mulled over the possibility of another set of U.S. strikes on Iran. That’s a difference of more than 15.5% from trough to peak on the week. The gold-silver ratio was largely inversely correlated with silver’s price trajectory on the week, peaking at over 66:1 on Tuesday before sliding for three consecutive days to a weekly low of 60.34:1.

Domestically, the Federal Reserve’s future remains a major story. The FOMC is widely expected to keep interest rates unchanged at its March meeting. CME FedWatch projects the probability of a rate cut at that meeting to be just 4.1%, down from 9.2% last Friday and 21.0% one month ago. President Trump nominated Kevin Warsh to succeed Jerome Powell as Chair of the Federal Reserve, but the former Fed Governor’s path to confirmation may be trickier than initially expected. GOP Senator Thom Tillis stated that he would refuse to back any Fed Chair nominee until the Department of Justice’s investigation into Jerome Powell, which concerns cost overruns in the Fed’s D.C. headquarters renovations, is fully resolved. Last week, Tillis told reporters that he may be willing to reach a compromise if the Senate Banking Panel, rather than the Justice Department, were allowed to investigate the cost overruns. With Powell set to leave his post as Fed Chair in May, any drama surrounding the Federal Reserve’s next chairperson could have a major impact on rate cut expectations – and safe haven demand.

Next week, traders will be able to view speeches from several notable Federal Reserve officials. The February U.S. employment report, slated for release on March 6th, should be the next major economic health indicator traders have access to. This report should be especially important for the FOMC’s rate cut decision; a cooling job market prompted the three consecutive rate cuts we saw at the end of 2025. In the meantime, geopolitics should play an outsized role in driving demand in the uncharacteristically volatile precious metals market.