Will Iran-Israel conflict lead to higher gold and oil prices? Economist Mohamed A. El-Erian says…

Senior economist warns of higher gold and oil prices, and lower US Treasury yields and stocks amid Iran-Israel crisis. In his latest X post, Allianz chief economic adviser Mohamed El-Erian said rising geopolitical tensions may lead to ‘higher gold, oil prices.'

Livemint
Updated14 Apr 2024, 09:37 PM IST
Heightened tensions in the Middle East due to Iran's missile strike on Israel is expected to have significant impact on markets.
Heightened tensions in the Middle East due to Iran’s missile strike on Israel is expected to have significant impact on markets.(AFP)

Underlining the risk of increased geopolitical tensions amid Iran-Israel crisis on markets, senior economist Mohamed A. El-Erian on Sunday said that the current situation may result in “higher gold and oil prices, and lower US Treasury yields and stocks than would have prevailed otherwise.”

Israel-Iran tensions LIVE Updates

The ongoing Israel-Iran crisis has heightened tensions in the Middle East. Many countries have expressed their fear of the impact of further escalation in the situation on world peace.

“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 in a post on X.

In one of his previous posts on X, Mohamed A. El-Erian pointed out towards the rise in oil prices after latest escalation of tensions between Israel and Iran.  

After Iran's attack on Israel he touched upon multiple factors that could potentially impact crude oil prices in case of worsening of situation. 

“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 wrote on X.

Apart from global oil trade, gold and bond prices, Indian stock market might face the ripple effect of the Iran-Israel crisis. Significant escalation in tensions may lead to panic selling and volatility in global equity markets, noted Santosh Meena, Head of Research, Swastika Investmart Ltd.

"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," PTI quoted Meena.

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First Published:14 Apr 2024, 09:37 PM IST
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