In fresh days, global financial markets have been under strong force following reports of the US attack on Iran's atomic facilities. This escalation of tensions in the mediate East has sparked violent reactions from investors worldwide. In the face of an expanding threat, many capital began to flow to the alleged safe havens – especially the US dollar and gold.
As a result, Polish currency – gold – was under considerable force and noted weakness. However, it is worth noting that experts from financial institutions, specified as PKO BP, measure that the current fluctuations are average and temporary.
Geopolitics and the Course of Gold
PKO BP expert, Mirosław Budzickipoints out that the consequence of investors to developments in the region is typical of an increased hazard situation. "Investors retreat from assets considered to be more risky and place funds in safe instruments, resulting in short-term gold weakness," says Budzicki.
The temporary weakening of the Polish currency may affect the import and the cost of handling abroad debt, but – according to a specialist – it is not expected that more serious and long-term turbulence will happen without further escalation of the conflict.
Rising oil prices and their impact on inflation
These tensions besides have a direct impact on the natural materials market. peculiar attention is paid to the rising oil price – Brent's barrel has increased by respective dollars against the background of concerns about blocking the strategical Strait of Ormuz.
Increased fuel costs are a origin that can increase inflationary force in Poland and another European countries. In specified a situation, central banks may waive the planned interest rate reductions, which in turn affects the credit and investment market.
The consequence of bond markets and possible consequences
The increase in uncertainty besides affected the bond market. Investors balance the fear of war escalation and fear of rising inflation. This creates a volatility in the yields of bonds and thus affects the cost of financing of states and companies.
In the event of further escalation of the conflict, capital flows from emerging markets, including Poland, can be expected. This may mean not only further weakening the gold, but besides declines on the Stock Exchange.
Market expectations and prospects for the coming days
The key origin for stableness will be Iran's consequence to the American attack. If Tehran's consequence is moderate, the situation can rapidly return to balance and investors will gradually turn their movements towards emerging markets.
On the another hand, the escalation of the conflict threatens to importantly worsen the temper on the market, which will translate into long-term turbulence.
It is worth noting that political and military action by another countries and global organisations, which are trying to mitigate the conflict, besides affects the situation.
Investors search safe assets
During times of higher risk, global markets are characterised by increased request for conventional "safe havens" – the US dollar, gold and bonds of unchangeable economies. For now, the consequence to the bond marketplace remains subdued, but any unpredictable decision in the mediate East can have far-reaching consequences.
The US attack on Iran's atomic facilities has introduced uncertainty on financial markets, resulting in a weakening of gold and rising oil prices. Nevertheless, experts inform against excessive panic, indicating that the current situation is temporary unless further escalation occurs. Future days will be crucial for stabilising global markets as well as for the economical situation of Poland.
Investors should closely follow further political and military communications that can find the course of events.
Read more:
Alarm on the currency market: gold loses after US attack on Iran – what next?
