Topic 3: BULLION: UNDER SIEGE

March 2026 proved to be a frustrating month for bullion investors in India — plenty of drama, but ultimately little reward. Both gold and silver ended the month lower than where they started, despite a geopolitical backdrop that, in theory, should have been tailor-made for safe-haven assets. The West Asia conflict delivered sharp spikes and gut-wrenching reversals in equal measure, leaving the month characterised less by a clear directional trend and more by exhausting whipsaw volatility that tested the nerves of traders and long-term holders alike.

Gold in the domestic market started March around ₹14,309 per gram before sliding to a net lower close by month end, with intraday swings of several hundred rupees per 10 grams becoming a near-daily occurrence. The month's most dramatic session came on 26 March, when gold surged over ₹3,000–3,700 per 10 grams in a single day on the back of global risk-off sentiment and a briefly softer dollar — but this move came after the metal had already given up far more ground earlier in the month. Silver's journey was even more turbulent. Starting near ₹2.95 lakh per kilogram, silver briefly touched ₹3.15 lakh in early March before collapsing to approximately ₹2.5 lakh by month end — a decline of roughly 5% that significantly outpaced gold's losses, reflecting silver's greater sensitivity to both industrial demand conditions and speculative positioning.

The story of why bullion underperformed despite an active regional conflict comes down to one dominant factor: crude oil and its knock-on effects on interest rate expectations. When US-Israel strikes on Iranian targets triggered the initial escalation in late February and early March, gold and silver responded exactly as textbook safe-haven logic would predict — MCX gold briefly surged above ₹1.66 lakh per 10 grams while silver touched multi-month highs. But the same conflict that drove investors into gold also drove Brent crude above $100–110 per barrel, and that oil spike carried a sting in its tail. Higher crude meant higher global inflation, which in turn pushed back expectations of rate cuts from the US Federal Reserve and other major central banks. Since gold and silver are non-yielding assets, rising real rate expectations make them structurally less attractive, and the market wasted little time in repricing that reality. By mid-March, gold had shed ₹12,000–20,000 per 10 grams from its early-month peak, and silver had corrected by ₹30,000–1 lakh per kilogram — steep reversals that unfolded even as the underlying geopolitical conflict showed no signs of resolution.

The dollar and US Treasury yields added further headwinds. While geopolitical uncertainty initially softened the dollar and lent some support to bullion, the subsequent shift toward a more hawkish rate narrative strengthened the greenback and pushed up Treasury yields — a combination that typically pressures dollar-denominated gold and silver prices, with the effect transmitted directly into Indian rupee-denominated domestic rates.

A late-month bounce on de-escalation talk — gold up roughly 1% and silver jumping nearly 4% on MCX in the final sessions — offered some consolation but did not meaningfully alter the month's outcome. March 2026 ultimately delivered the worst of both worlds for bullion: maximum volatility with negative returns, as the rate-hawkish oil shock proved a more powerful force than the war-risk safe-haven premium.