Precious metals refiner Heraeus says the initial safe haven boost to gold has faded, with the gold price still suffering from the fallout of the rapid rally to its record high.

Safe-haven purchases as a result of geopolitical concerns are being offset by profit-taking as investors reassess the outlook for further gains.

Heraeus explains that the market response from the conflict in the Middle East has been less extreme than might have thought – possibly owing to expectations that it will be short-lived.

When Russia invaded Ukraine in 2022, the gold price rallied for two weeks following the start of that conflict but then gave up those gains, ultimately ending the year with little change as the overall sideways trend reasserted itself.

There will be a bump in inflation driven by higher energy costs, but US Treasury yields have only risen by about 20 basis points.

Heraeus says the dollar has strengthened but the dollar index has moved from 97.6 on the Friday before the US and Israel attack on Iran began to 99. “That is still below where it was in January and it was as high as 110 in January 2025.”

The firm adds there are several possible headwinds for gold including the stronger dollar and the chance of higher inflation leading to fewer rate cuts or even rate rises, which are now being priced in, but the impact may be temporary if the conflict ends quickly.

Precious metals trade in the Middle East has been grounded by the conflict.

Dubai is a trading hub for gold that imports material for refining and has significant gold exports, particularly to India.

Gold is often transported on commercial passenger flights but these have been effectively stopped by the conflict, with thousands being cancelled.

Meanwhile, the world’s largest primary silver producer, Fresnillo, projects lower silver production ahead. Silver output was 48.7-million ounces in 2025, which was in line with guidance but down 13.5% year-on-year.

Silver prices initially rose in response to the start of hostilities in the Middle East; however, like gold, it is also dealing with the after-effects of its rally to record prices. Silver prices closed the week of March 2 at a price of $83.98/oz.

The silver rally was used as an opportunity to reduce exposure and take profits as exchange-traded fund holdings dropped.

The price has fallen below its corrective price channel, Heraeus finds, which would suggest that the price may be on the decline in the near-term.