US-Iran war: US President Donald Trump’s remarks that the Iran war is “effectively over” have raised hopes of easing geopolitical tensions in the Middle East, potentially providing relief to global financial markets. The comments could influence investor sentiment towards riskier assets such as equities while also triggering volatility in traditional safe-haven investments such as gold and silver.
For Indian markets, any signs of de-escalation between the US and Iran could be positive, particularly if they lead to a sustained decline in crude oil prices. Lower oil prices could ease India’s imported inflation concerns, support the rupee and improve the outlook for corporate earnings.
However, the impact on precious metals could be more complicated. While easing inflation concerns and expectations of lower interest rates could support bullion prices, a reduction in geopolitical uncertainty could also reduce demand for gold and silver as safe-haven assets.
US-Iran war over: Impact on Sensex and Nifty
According to market experts, Trump’s remarks could provide a near-term boost to Indian equities by easing geopolitical uncertainty and improving global risk appetite. The prospect of reduced military tensions in the Middle East may encourage foreign institutional investors (FIIs) to return to emerging markets, including India, after periods of heightened volatility.
Mahesh M Ojha, VP Research & Business Development at Kantilal Chhaganlal Securities, said Trump’s comments indicate that the ongoing war could be nearing an end, which may support positive sentiment in the Indian equity market in the near term.
“Trump’s comments suggest that the war could be approaching its conclusion, which is a positive development for the Sensex and Nifty in the near term,” Ojha said.
He added that the Nifty needs to sustain above 25,150 to open the door for further upside.
For the Nifty, the immediate upside targets are 25,400, 25,600 and 25,740-plus. For the Sensex, 82,500 is an important level to sustain above, with resistance placed at 83,300 and 85,600. On the downside, key support levels for the Sensex are at 80,630, 80,170 and 79,800.
However, the sustainability of the rally will depend on whether diplomatic negotiations translate into a lasting ceasefire and whether crude oil prices continue to decline. The situation remains fluid, as Trump has kept the possibility of renewed military action open, while Iran has disputed claims of progress in negotiations.
US-Iran war over: Impact on gold and silver prices
Gold and silver prices could witness mixed movements following Trump’s comments, as the potential end of the Iran conflict has two opposing implications for precious metals.
Anuj Gupta, SEBI Registered Research Analyst, said Trump’s statement could influence gold and silver prices through the crude oil and inflation channel.
“US President Donald Trump’s statement that the Iran war is effectively over could have a positive impact on gold and silver prices through the crude oil and inflation channel. Any sustained correction in crude oil prices could ease inflationary pressures, reducing expectations of further interest rate hikes by central banks. This could support demand for non-yielding assets such as gold and silver and potentially trigger a recovery in bullion prices,” Gupta said.
However, he cautioned that an end to the conflict could also lead to the unwinding of the geopolitical risk premium currently embedded in gold and silver prices, as investors may reduce their safe-haven exposure.
“Therefore, while lower crude oil prices and easing inflation concerns could support precious metals, the dilution of geopolitical risk premium may limit their upside in the near term. The overall direction will depend on how these two opposing factors play out,” he added.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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