Gold and silver prices show strange behavior, excluding from their traditional role of safe refuge. The opening of the Straits of Hormuz caused an increase instead of a fall, as concerns about inflation and recession decreased. Morgan Stanley now questions the status of gold as a safe haven. Central banks of emerging economies, such as Turkey that sold 52 tons of gold between 27 February-27 March, liquidate reserves to cover energy costs and support their coins. On the contrary, China continues to buy, with stocks reaching 2,308 tonnes in late March.
Analyticalally:
Do the Straits of Hormuz open and uncertainty regarding the Middle East war is limited? Gold and silver mark a rally against the status of their safe shelter. Do the Straits of Hormuz close and the US-Iran tension escalates again? The prices of precious metals are abruptly receding with concerns about reheating inflation.
«Weird.» Things have been happening in the markets lately, raising critical questions about the investment world. Others believe that we are faced with tectonic changes in the way many axes are treated, including precious metals, while others insist that traditions do not break so easily and argue that we are simply going through a period of intense turbulence that will eventually be overcome.
What role do central banks of countries such as Turkey, which are moving towards gold sales, play against the trend of previous years? Does investors eventually treat gold as an alternative investment, which is explained by the fact that its price had 90% correlation with S&P 500 in the six months from August to late January?
Answers to these questions clearly and exist, but now the setting is more complex than ever. A typical example is what happened last week, when within a few hours the account changed. The long-awaited opening of the Straits of Hormuz directly restricted the geopolitical premium to markets, removing one of the key catalysts that shaped the trend in recent weeks.
Even for a while, we saw the markets go through the risk of a prolonged – and for some permanent – energy crisis, in the narrative of temporary and unsure de-escalation.
The strange thing is that rather than being under fall pressure because of the reduction in demand for safe shelters, the immediate reaction of the prices of gold and silver was to make a significant rise in the wake of the news about the Straits because extreme concerns about ejecting inflation and global recession were simply limited.
Nevertheless, even after last Friday's push, gold remained about 8% lower than the level before the war, which forced Morgan Stanley to question his status as «investment shelter».
According to the US bank gold now behaves as a very strange mixture of safe shelter, high risk acet and alternative investment. Of the 90% correlation with the S&P 500, gold went into a sub-performance phase, as the current crisis on the supply side will have a very different impact on monetary policy compared to a demand crisis.
In all of this, we see some central banks of emerging economies as being able to «Get rid of them.» gold. The Central Bank of Turkey proceeded to sell 52 tonnes of gold between 27 February and 27 March according to the FT, while other central banks stopped buying precious metal with the fury of past years. In India, for example, the central bank «freeze» imports of gold to prevent pressure on the national currency, and stock exchanges have been observed that ETFs liquidated around 90 tonnes of gold in March, out of 150 tonnes purchased in the two months of January-February.
So what exactly is happening in the markets?
Increased oil prices since early March have been suffocating energy-dependent countries, with a typical example of South Korea importing 90% of the energy it consumes from the Persian Gulf. In addition, increased volatility in the foreign exchange market, due to extreme uncertainty, forces certain central banks to make targeted interventions. Because the rise in the dollar and borrowing costs hit many emerging economies.
In other words, the central banks of these countries have used part of their gold reserves either to cover the increased cost of energy and defence expenditure or to protect their national currencies from a large and abrupt fall.
This is how we arrived at the reports that want large central banks to sell gold in a reversal of the dominant trend of previous years.
At the same time, the major market player, China, continues to buy gold in order to reduce its dependence on the dollar and American bonds. At the end of March, China's official gold reserves amounted to 74.38 million ounces or about 2,308 tonnes, accounting for 10% of the country's total exchange reserves. Since People’s Bank of China is far below average, the target of increasing stocks offers continuous market support, which is not expected to be reversed.
To remind you at this point that the new role that is called on to play gold and silver is important (more Here.) at a time when uncertainty becomes the new norm.
As liberal.gr has reported, silver and stood out for its performance in «Crazy» a rally that lasted from late 2024 to January 2026, at the same time stood out for unprecedented variability. The «white metal» He continues to be considered more... sensitive than gold but also more multidimensional and his new role is that of a balancer, that is, he is considered to be a more multidimensional one. «hybrid» player between crisis and development.
In the crisis it still has safe shelter characteristics and in development prices are driven by increased industrial demand and problematic supply. Silver also benefits from efforts to achieve the objectives of the long-term energy transition. Silver may recover faster than gold if shares return to rally and industry shows that it leaves behind the Middle East crisis.
