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Tensions boost the dollar, lift oil, and weigh on gold

Energy lifts oil; inflation pressures gold and supports the dollar

Global markets in March 2026 are experiencing severe turmoil due to the escalation of the war in the Middle East, especially with the expanding conflict involving the United States, Israel, and Iran, and its direct impact on the global energy sector.

1. What happened in the war and its impact on markets?

The military escalation included:

• Strikes on gas and oil facilities, such as the South Pars field
• Reciprocal attacks on energy infrastructure in the Gulf
• Threats and partial closure of the Strait of Hormuz, through which about 20% of global oil supplies pass

The attacks also disrupted production in several Gulf countries and increased risks to global supply chains.

2. Why did oil rise?

Direct consequences of the war:

• Disrupted oil and gas supplies
• Reduced production in key countries
• Increased fears of a global energy shortage

As a result, prices surged, with oil exceeding $100 per barrel and reaching $110–118 in some periods.

3. Why did the dollar rise?

Although wars often support gold, what happened was different:

Reasons:

1.  The use of the dollar as a safe haven amid uncertainty, as investors preferred to hold liquidity.
2.  The rise in dollar yields with expectations that interest rates would remain high.
3.  Capital flight from markets due to selling stocks and assets and moving to the dollar.

Therefore, the dollar index rose significantly worldwide.

4. Why did gold fall?

Despite the tensions, gold did not benefit but declined due to:

Stronger dollar: Gold is priced in dollars → a stronger dollar makes gold more expensive globally → demand decreases.

High interest rates: Rising oil increased inflation expectations → central banks (especially the Fed) are expected to keep rates high → gold becomes less attractive as it yields no interest.

Changed market perception of the war: The market did not see the war as a “risk only” but as a strong inflationary factor due to energy → this put pressure on gold instead of supporting it.

5. Relationship between the three (Oil – Dollar – Gold)

The chain was as follows:

War → Energy strikes → Oil rises → Inflation increases → Interest rates remain high → Dollar strengthens → Gold falls

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