Morgan Stanley: Investors are starting to question gold's status as a safe haven and prefer silver and aluminum.

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The upheaval in the commodities market triggered by the Iran conflict is shaking the status of gold as a traditional safe haven asset. Morgan Stanley analysts point out that gold has recently behaved more like a risk asset rather than a risk-hedging instrument, and they are shifting their attention to silver and aluminum, believing that these two metals have more solid fundamental support.

Morgan Stanley metals and mining strategist Amy Gower said in an interview with CNBC this week, Gold's current behavior is more like a risk asset rather than a safe haven. Normally, it should serve as a risk diversification tool in a portfolio, but this function hasn't truly played out recently.

Gold prices fell alongside most global asset classes when the Iran conflict first erupted; although a ceasefire announcement brought a rebound, as of Thursday, gold prices were still down about 7% from a month ago, at $4,752.55 per ounce.

This performance has led the market to reassess gold's role in asset allocation, prompting some investors to focus on silver and aluminum. Morgan Stanley believes these two metals have substantial supply-demand fundamentals supporting them and clearer upward logic in the current market environment.

Gold's safe haven attribute in question, large holders become price variables

Amy Gower admits that it's normal for gold to weaken to some extent after a market shock, as investors often sell the most liquid assets first to raise cash.

However, she points out that gold prices are increasingly influenced by the trading behavior of large holders such as central banks and ETFs, making price movements harder to explain purely with safe haven logic.

This judgement implies that gold’s diversification function in portfolios faces structural challenges. When the market most needs a safe haven buffer, gold prices fall alongside risk assets—a signal that investors relying on gold to hedge risks should take seriously.

Solid fundamentals for silver, but speculative premium has partially faded

By contrast, Amy Gower holds a more positive view on silver, believing silver "has genuine reasons to rise". Over the past 12 months, silver prices have climbed nearly 150%, driven by years of persistent supply shortages and explosive growth in demand from the solar industry.

"The supply gap has existed for years, and in the precious metals market, such gaps can be masked for a while. When last year's financial trading demand surged, there simply wasn't enough silver in the market," Amy Gower said.

Still, silver recently saw a notable pullback, down more than 11% in the past month, with spot prices now around $74 per ounce, far below the peak of over $100 in January this year. Amy Gower believes the move past $100 is hard to explain purely by fundamentals and clearly involves speculation.

Meanwhile, new changes are emerging on the demand side. Amy Gower notes that some large silver jewelry manufacturers are considering switching to platinum-plated alternatives, as high and volatile prices are causing demand substitution effects.

Aluminum supply disrupted, fundamentals most robust

Among the metals favored by Morgan Stanley, aluminum’s logic is the clearest. Since the Iran conflict erupted, concerns about supply disruptions in the Gulf region have pushed aluminum prices up about 10.4%, currently at $3,452.80 per ton.

Amy Gower says the aluminum market was already tight before the conflict. China previously stated it would not further expand aluminum capacity, and the rapid growth of AI and data centers has led to a sharp rise in power demand, eroding the competitive advantage of aluminum smelters in the power market—making supply and demand highly strained.

"Everything that happened in the past month only strengthened this logic," she said. "Currently, global aluminum supply has fallen by about 4%. And aluminum’s characteristic is that, once production stops, it’s not easy to restart."

Amy Gower further points out that even if the conflict ends tomorrow or there’s an unexpected shock on the demand side, aluminum prices will likely remain strongly supported, because supply recovery takes time and short-term gaps are difficult to close.

Risk Warning and DisclaimerThe market has risks, invest cautiously. This article does not constitute individual investment advice and does not take into account the unique investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions herein are appropriate to their specific circumstances. Invest accordingly, responsibility is borne by the investor. ```