Mumbai, March 7 -- Geopolitical crises typically send investors into precious metals. The latest West Asia escalation initially followed that script: gold and silver jumped 5% and 9% on 2 March after the US-Israel-Iran conflict erupted. But both have since dropped 4% and 10%, wiping out most gains. The swings puzzled investors expecting a steadier safe-haven rally. Analysts cite stretched valuations, macro constraints and liquidity pressures-suggesting gold and silver may not act like classic safe havens this time. Part of the answer lies in how far the metals have rallied; the rest in speculative interest those gains have drawn. Gold has nearly doubled and silver has tripled in past two years. Both surged in popularity last year, as investors had greater trust in liquid physical assets over a dollar-denominated financial system. In January, Indians invested more in gold exchange traded funds (ETFs) than in equity mutual funds for the first time, with net inflows surging to a record Rs.24,040 crore even as equity fund investment slipped to Rs.24,029 crore. Kotak Institutional Equities said the rise in global ETF holding indicates "massive speculation" in gold and silver across institutional and retail investors. This can introduce significant volatility at stretched valuations. For instance, the metals peaked on 29 January, when 10 gms of gold touched Rs.1.75 lakh and silver was at Rs.3.8 lakh per kg. From those peaks, gold and silver dipped 15% and 36%, respectively, to their lows for the year as investors began questioning valuations after the record rally. A stronger US dollar and fears of more hawkish US Federal Reserve leadership in the future accelerated the sell-off. Even so, precious metals rank among 2026's best-performing assets. Gold and silver are up 20% and 15%, respectively, while Nifty 50 is down 5.3%. Analysts warn the rally could may trigger profit-taking. "Precious metals are in a consolidation phase where prices may stick around current levels for a while," Apurva Sheth, head, market perspectives and research at SAMCO Securities, said. Another factor behind the latest sell-off is liquidity pressure.When markets decline sharply during a crisis, traders often need quick cash to meet margin requirements. They liquidate safe-haven assets to meet thee margin calls, Kaynat Chainwala, associate vice-president, commodity research at Kotak Securities said. In other words, even safe-haven assets can briefly fall during a crisis if investors scramble for liquidity. This time, swings in precious metals are steeper driven by speculative volatility. Silver illustrates the pattern clearly. The metal surged nearly 9% on 2 March when markets first reacted to the West Asian conflict but has since dropped about 10%. Meanwhile, during the Russia-Ukraine conflict in 2022, silver rose roughly 6% initially before falling about 4% in the following days, according to a Mint analysis. Experts said if the current crisis persists, continued margin calls across other assets could amplify volatility in precious metals and subdue their gains. Ironically, the same geopolitical tensions driving safe-haven demand could also limit gold's upside. Analysts say an escalation in West Asia could keep crude oil prices elevated, feeding into global inflation. That complicates US monetary policy, which strongly influences movements in gold....