Global financial markets are on high alert as events in Iran escalate, with protests spreading to various cities. All eyes are now on Washington, amid reports that US President Donald Trump is scheduled to receive a security and strategic briefing tomorrow to discuss available response options for dealing with this escalating situation, adding a new layer of geopolitical uncertainty.
Safe havens break records
Amid this tense atmosphere, investors flocked to traditional safe havens, driving precious metal prices to unprecedented levels. Gold broke a major psychological and technical barrier, surpassing $4,600 an ounce for the first time ever. The yellow metal rose 1.7% in spot trading to $4,584.74, after reaching a session high of $4,600.33. US gold futures for February delivery also jumped 2.1% to $4,595.30.
Silver was not immune to this frenzied rise, as it also recorded its highest level ever, jumping 5.1% in spot trading to reach $84.06 an ounce, after touching $84.60 earlier, driven by investors’ desire to hedge against potential economic and political risks.
Energy markets and supply concerns
In the energy markets, the unrest cast a long shadow over oil prices, given Iran's status as a founding and active member of the Organization of the Petroleum Exporting Countries (OPEC). Concerns about potential supply chain disruptions or damage to oil infrastructure weighed heavily on trader sentiment, pushing Brent crude up 0.49% to $63.65 a barrel, while US West Texas Intermediate crude rose 0.51% to $59.42 a barrel. This increase follows last week's gains of over 3%, the largest since October, reflecting the market's heightened sensitivity to any tensions in the Arabian Gulf region.
European stocks decline and the overall context
Geopolitical concerns negatively impacted stock markets, with European exchanges opening across the board lower. The pan-European STOXX 600 index fell 0.2%, followed by the UK's FTSE 100 (down 0.26%), Germany's DAX (down 0.1%), and France's CAC 40 (down 0.25%), indicating a current aversion to high-risk assets among investors.
These events gain significance from their historical and geographical context; Iran is not merely an oil producer, but also overlooks the Strait of Hormuz, a vital artery for global energy. These protests, described as the largest since 2022, remind the world of the fragility of stability in the region and its direct impact on the global economy. Analysts believe that continued unrest could exacerbate global inflationary pressures if energy supplies are actually disrupted, presenting central banks and policymakers with complex challenges in the coming period.
