Gold and silver give back early Iran gains, but conflict impacts regional flows as markets bet on short war – Heraeus

Heraeus says gold and silver have retraced the initial safe-haven spike from the Iran conflict, with profit-taking dominating after a rapid rally to record highs. They argue the market’s relatively muted reaction—alongside only a modest rise in US yields—suggests investors are pricing a short-lived conflict, which limits the durability of the geopolitical bid for precious metals. Heraeus expects inflation pressure via higher energy costs, but notes US Treasury yields are up only ~20 bps. The USD has strengthened, with DXY cited rising from 97.6 pre-attack to 99 (still well below January levels and far under the ~110 peak referenced for Jan 2025). They flag headwinds for gold from a stronger dollar and the risk that higher inflation reduces the scope for Fed rate cuts (or even brings rate hikes back into pricing), but stress these impacts may fade quickly if hostilities end. More “real-economy” disruption is emerging in bullion logistics: Dubai’s role as a regional gold trading/refining hub is being impacted as commercial passenger flights (a common route for gold transport) have been effectively halted, with thousands of cancellations—potentially tightening near-term regional physical flows, particularly for routes linked to India. On silver, Heraeus highlights supply-side tightening risk from Fresnillo: 2025 output was 48.7 moz (down 13.5% y/y from 56.3 moz in 2024) and 2026 guidance is 42.0–46.5 moz due to mine-plan changes and throughput/grade effects. Despite this, they see technical downside: silver has fallen below its corrective channel, with initial support at $78/oz and then $64/oz (early-Feb low). They also note ETF holdings dropped as the rally was used to reduce exposure—signaling flow-driven pressure near term even with longer-run supply questions.