As US-Israel-Iran frictions ignite Middle East volatility, experts forecast a bull run for gold alongside safe-haven currencies such as the dollar and yen. DBS Bank’s Wednesday report lays out the implications of this brewing crisis for global markets.
Bond investors face headwinds with expanding spreads on sovereign and corporate debt, even as near-term interest rate policies stay unchanged. The rush to safety signals deep unease over the region’s stability.
Taimur Baig, DBS’s top economist, flags Iran’s Hormuz mine-laying prowess as a game-changer. “Low warship risks aside, this could slow shipments dramatically, jacking up insurance, freight, and oil prices,” he said.
The conflict’s ripple effects could be vast. Baig warns of intertwined wars involving Kurds up north and Baloch down south, potentially leading to regime shifts that ensnare neighbors like Turkey and Iraq.
Global oil flows hinge on Hormuz; its long-term shutdown would cause chaos, with Gulf crude unable to reach markets. US reserves alone couldn’t fill the gap in a worst-case meltdown.
Projections show crude hitting $100-150/barrel in blockade scenarios, stoking inflation expectations, limiting Fed easing, and pushing the world toward downturn. DBS advises against silver as gold’s stand-in: Its 60% industrial demand and thin liquidity undermine diversification claims.
Markets are on edge—safe havens offer the brightest outlook in darkening skies.