Iran-Israel scuffle: Will oil and gold prices rise amidst the geopolitical conflict?

Senior economist Mohamed A. El-Erian highlighted the possibility of heightened geopolitical tensions over the Iran-Israel issue on Sunday, speculating that the current state of affairs would lead to “higher gold and oil prices, and lower US Treasury yields and stocks than would have prevailed otherwise.”

“In the short term, a key question for markets is whether the latest escalation in the Iran-Israel tensions is over or there is more escalation to come.”

“Meanwhile, the underlying geopolitical risk has increased regardless of where investors’ collective view on the first point settles in Monday trading. This would imply higher gold and oil prices, and lower US Treasury yields and stocks than would have prevailed otherwise,” the chief economic advisor at Allianz wrote on X.

Numerous nations have voiced their concern over the Israel-Iran war and the potential effects of additional intensification of the crisis on global harmony.

Mohamed A. El-Erian mentioned the increase in oil prices following the most recent escalation of hostilities between Israel and Iran in one of his earlier postings on X.

“What happens next is a function of the extent to which tonight’s Iranian attack on Israel triggers a direct retaliation and, should that happen, how OPEC+ responds to even higher oil prices,” he penned down on X.

The Iran-Israel conflict may have an effect on the Indian stock market, which might then cause panic selling and instability in the world’s equity markets, which would have an effect on the price of bonds, gold, and oil internationally.

“This week promises to be crucial for the market as fresh worries about a potential conflict between Iran and Israel emerge. Any significant escalation in tensions could trigger panic selling and volatility in global equity markets. The market will also be closely monitoring the movement of crude oil prices, which are often impacted by geopolitical events,” said Meena as quoted by PTI.