No end in sight – US Iran War

Global markets in 2026 are being driven less by fundamentals and more by geopolitical stress—specifically the escalating conflict involving the United States and Iran. This has created a distorted but revealing environment across commodities, currencies, and the broader economic system.

Gold and silver are no longer reacting in a simple “risk-on/risk-off” manner. Traditionally, war drives precious metals higher, and we did see gold push toward record levels above $5,000 earlier this year . However, the current environment is different. Rising oil prices are feeding inflation expectations, which in turn keeps interest rates elevated—this reduces the appeal of non-yielding assets like gold and silver . Net effect: metals remain structurally bullish, but short-term price action is volatile and sometimes counterintuitive.

Oil is the real epicenter. The near-closure of the Strait of Hormuz—responsible for roughly 20% of global oil flow—has triggered a supply shock . Prices have surged past $110 per barrel and could go significantly higher if disruptions persist . This is not speculative pricing—it’s physical supply destruction. The result is immediate: rising fuel costs, supply chain disruption, and global inflation pressure.

The risk of escalation is real and underpriced. The US-Iran conflict is no longer a contained regional issue. Direct threats to infrastructure, shipping lanes, and energy assets suggest a path toward prolonged war rather than quick resolution . If escalation continues, expect second-order effects: global recession risk, food price spikes, and sustained commodity inflation.

This feeds directly into the reshaping of the global economy. We are seeing:

• Supply chains fragmenting again (post-COVID, now geopolitics-driven)
• Energy security becoming the top macro priority
• Countries accelerating moves away from dependency on single trade routes or currencies

There is also a structural shift underway: central banks, especially outside the West, are diversifying away from the US dollar and increasing gold reserves . That’s not cyclical—that’s strategic.

The US dollar’s outlook is mixed but fragile long term. In the short term, it remains strong due to safe-haven demand during crises . But structurally, it faces pressure from:

• De-dollarization trends
• Persistent inflation risks from energy shocks
• Rising geopolitical fragmentation

Bottom line:

• Short term → USD strong, oil volatile, metals choppy
• Long term → commodities stronger, USD dominance gradually eroding

This isn’t a normal cycle. It’s a transition phase toward a more fragmented, commodity-driven global economy.