Gold and silver prices continued to see sharp losses on Monday, with bullion failing to act as a traditional safe haven amid the Iran conflict, as rate cut hopes fade and markets are instead pricing higher borrowing costs to tame the potential rise in global consumer prices.

Gold slid more than 8% on Monday to ‌hit its lowest level in four months, after logging its biggest weekly loss in about 43 years last week, as an escalating Middle East conflict stoked inflation concerns and raised expectations of higher global interest rates.

Spot gold declined 6.3% to $4,203.21 per ounce by ​07:57 a.m. GMT, extending losses into a ninth straight session. It had shed more than 8% to $4,097.99 ​earlier in the session to its lowest level since Nov. 24.

The metal dropped more ⁠than 10% last week, its steepest weekly loss since February 1983, and has also retreated about 25% from its record peak of $5,594.82 ​an ounce reached on Jan. 29.

Silver has seen even steeper losses. Prices have dropped by nearly half from a record high of around $122 per ounce at the end of January. On Monday, silver fell a further 5% to around $64.25, leaving it down more than 30% since the Iran conflict began just over three weeks ago.

Later during the day, it slipped below $64.

Rising oil prices have increased inflation risks and reduced expectations for near-term interest rate cuts by the U.S. Federal Reserve (Fed) and other central banks. Higher interest rates typically weigh on non-yielding assets such as gold.

Monday’s decline wiped out all gains made since the start of the year. Gold has fallen nearly $1,300, or about 23%, from its record high of close to $5,600 in late January.

“With the Iranian conflict into its ​fourth week, and oil prices hanging around the $100 level, expectations have pivoted from rate cuts to potential rate hikes, which have tarnished gold’s appeal from a yield point of view,” said Tim Waterer, chief market analyst, KCM Trade.

Iran said on Sunday it ​would strike the energy and water systems of its Gulf neighbours in retaliation if U.S. President Donald Trump followed ​through with his threat to hit Iran’s electricity grid.

Asian shares fell, and oil prices stayed above $110 a barrel.

“Gold’s high liquidity ‌appears to ⁠be hurting it during this risk-off period. Downturns in stock markets are leading to gold portions being closed to cover margin calls on other assets,” Waterer said.

The closure of the Strait of Hormuz has kept crude elevated, stoking inflation fears by pushing up transport and manufacturing costs. While rising inflation typically boosts gold’s appeal ​as a hedge, high rates ​curb demand for the ⁠non-yielding asset.

“A reinforced shift from safe-haven allocation towards macro-driven positioning could skew risks further to the downside, as a firmer U.S. dollar and the receding probability of ​the Fed easing dominate the narrative,” said BMI, a unit of Fitch Solutions.

Market pricing ​for a ⁠U.S. Federal Reserve rate hike this year has shot up, with rate futures showing the U.S. central bank is more likely to raise interest rates than cut them by the end of 2026, according to CME’s FedWatch tool.

Other precious ⁠metals also ​declined sharply, including platinum, which was down 6.4% to $1,799.25.

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The energy crisis triggered by the war between the U.S., Israel and Iran is expected to fuel inflationary pressures in the global economy, while the economies of Gulf countries – key logistics hubs in global trade – are suffering serious damage from the conflict, according to an Anadolu Agency (AA) report released on Sunday.

This section of AA’s special report series titled “The Toll of War in the Gulf” examines the impact of developments following U.S. and Israeli attacks on Iran, not only on regional economies but also on the global economy.

Asian countries stand out as the main export markets for Gulf nations such as the United Arab Emirates (UAE), Qatar, Bahrain, Kuwait, Saudi Arabia and Oman. Accordingly, the closure of the Strait of Hormuz poses a risk not only to the entire world but especially to Asia.

While this situation leads to significant revenue losses for Gulf countries, it also puts pressure on their production models, which rely heavily on foreign labor.

Since the war began, Dubai’s real estate index has plunged by around 26%, while Qatar’s has declined by about 7%. Meanwhile, Dubai’s financial market index has dropped by roughly 15%.

Similarly, Saudi Arabia’s stock market was down sharply at the onset of the war, and, although it has since partially recovered, it remains at lower levels. Significant declines have also been observed in the UAE and Qatar stock markets.

The region-driven energy crisis also poses risks for global inflation.

Gulf oil

Erhan Akkaş, an associate professor at the Economics Department of Ankara Social Sciences University, stated that the sharp decline in Dubai’s real estate index indicates how negatively the city’s economy will be affected by this process.

Noting that Kuwait, Oman and Bahrain have been similarly impacted, Akkaş said: “There are declines in the stock markets of Gulf countries. However, the UAE and Qatar appear to be much more affected.”

“The UAE, in particular, is impacted by factors such as tourism, financial markets, trade and workers returning to their home countries,” he added.

Akkaş emphasized that the Gulf is an energy-rich region dominated by oil and its derivatives, warning that the closure of the Strait of Hormuz or damage to energy infrastructure would expose countries to serious risks.

He added that problems in the energy sector have a “spillover effect,” impacting even sectors not directly related to oil.

“Since the global economy is largely dependent on Gulf oil and natural gas, production costs rise across nearly all sectors, creating inflationary pressure worldwide,” he noted.

Akkaş also recalled that before the oil era, Gulf exports were largely based on fishing, pearl diving and related economic activities, while imports were dominated by high-value-added industrial goods and consumer products.

He explained that precious stones and metals, such as gold, diamonds and jewelry, are among the most significant goods, especially in imports. These are followed by machinery and mechanical equipment, including industrial machines, turbines and production tools. Electrical equipment ranks third, with computers, phones, and other electronic devices leading this category. Finally, motor vehicles and spare parts are also among the most imported goods in Gulf countries.

Impact on Dubai

At the same time, Akkaş suggested that Dubai will be among the most affected locations, as re-exported goods are directly exposed to the crisis.

“The UAE, especially through Dubai Port, is a re-export hub. Dubai, one of the key centers of global maritime trade and logistics networks, faces the risk of losing this position,” he said.

“Therefore, it is among the places that will be most directly affected.”

“Re-export activities, maritime trade, and port-based sectors are facing serious challenges. Since oil and natural gas are fundamental inputs for nearly all sectors, any decline in production or disruption in logistics leads to interruptions across a wide range of industries, from automotive to packaging,” he maintained.

Furthermore, Akkaş opined that significant issues arise in production processes where plastics and petroleum derivatives serve as raw materials, driving price increases and inflationary pressures.

“This is because oil and its derivatives are essential components in the production of many goods used today,” he said.

White-collar workers may leave

Akkaş noted that such crises can affect nearly all sectors through spillover effects, emphasizing that Gulf economies rely heavily on foreign labor.

He explained that white-collar workers, especially in fields requiring expertise, management, and technical knowledge, such as engineering, are largely recruited from Western countries.

“They may return to their home countries or move to safer regions of the world to find work,” he pointed out.

Higher prices

At the same time, analysts and executives at many financial institutions warn that prolonged war in the Middle East risks higher energy prices, which directly translate into higher consumer prices as oil and gas are key commodities widely used in production processes across industries.

First concerns related to higher prices and inflation came from leading global central banks, which in recent days decided to keep borrowing costs unchanged, or in some cases, like Australia, even deliver a small hike.

In a statement, the Reserve Bank of Australia (RBA) board said the conflict in the Middle East had resulted in “sharply higher fuel prices, which, if sustained, will add to inflation.”

As Washington and Beijing mull a new mechanism to manage bilateral trade between the world’s two largest economies, some analysts are concerned that it could interfere with market forces, while others consider it to be a path toward smoother coexistence.

What is the managed approach to trade that Donald Trump’s administration is seeking with China, as both sides work towards the U.S. president’s potential meeting with Chinese leader Xi Jinping in the coming weeks?

What is a ‘Board of Trade’?

After top U.S. economic officials held talks with their Chinese counterparts in Paris last weekend, U.S. trade envoy Jamieson Greer said both sides discussed creating a “U.S.-China Board of Trade.”

The mechanism would help to formalize and identify what kinds of goods the United States should be exporting to and importing from China, he said.

The board could look into opportunities for expanding trade in non-sensitive products, or discuss mutual tariff reduction in non-strategic sectors, said Wendy Cutler of the Asia Society Policy Institute.

For now, officials appear to have made progress towards Chinese purchase commitments for agriculture, energy and planes from the United States, added Cutler, a former U.S. trade official.

Is this new to U.S.-China ties?

The talks come as Washington looks towards “managed trade,” which Chad Bown of the Peterson Institute for International Economics said focuses on outcomes rather than policies.

This could mean import commitments or voluntary export restraints, as in the case of Japan in the 1980s to manage the flow of autos into the United States, he said.

A more recent example is the “Phase One” deal that Washington signed with Beijing during Trump’s first presidency, marking a truce in their trade war, Bown added.

The agreement saw China agree to import an added $200 billion in U.S. products over two years, although China did not meet the commitment.

Why has this sparked worry?

“Instead of taking regulations out, tariffs down, and making it easier for customers and companies to decide what they sell at what prices, it (would be) more mechanized,” said Joerg Wuttke, a partner at advisory firm DGA-Albright Stonebridge Group.

“That’s not a good sign,” he told Agence France-Presse (AFP). “Where are the market forces?”

Such an approach is also not good for competitiveness, and could fuel concern among other trading partners, Wuttke warned.

A U.S.-based business leader, speaking on condition of anonymity, said that managing trade raises concerns over how Washington will decide which industries to prioritize, and which sectors will benefit.

Does it help the relationship?

Bown of PIIE believes a managed trade agreement between the United States and China could be more successful than previous attempts to solve economic conflicts.

The question is whether this leads to “a more sustainable, longer-term relationship” that is better than a “constant back and forth of conflict,” he said.

“It’s clear the old system didn’t work. Could we try a new system that might work?”

But any trade agreement would have to be realistic and acceptable to both parties.

“You’d have to have a sincere commitment by both sides to make this work,” he added. “Even then, it’s going to be really, really hard.”

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China is reportedly restricting fertilizer exports to protect its domestic market, a ​Reuters report said on Thursday, citing industry sources, in what would mark an additional strain on global markets that were already grappling with shortages caused by the U.S.-Israeli war on Iran.

China is among the ⁠largest fertilizer exporters, shipping more than $13 billion worth of ⁠it last year, and it has a history of controlling exports to keep prices low for farmers.

Shipments through the war-blocked Strait of Hormuz account for roughly one-third of the sea-borne supply. In mid-March, Beijing banned ​exports of nitrogen-potassium fertilizer blends and certain phosphate varieties, sources told Reuters.

The ban, ​which ⁠has not been formally unveiled, was reported earlier this week by Bloomberg News.

Added to existing bans and export quotas for urea, only a handful of fertilizers, notably ammonium sulphate, can be exported, five sources said. That would mean between half and three-quarters of China’s exports last year are restricted, potentially up to 40 million metric tons, according to a Reuters estimate.

“This pattern is consistent: China restricts supplies rather than coming to the rescue during global tightness,” said Matthew Biggin, a senior commodities analyst at BMI.

“The export restrictions exist because of their tight domestic balance, they’re prioritizing food security and insulating their domestic market from price shocks.”

Beijing’s curbs, like its move last week to ban refined fuel exports, come as governments limit exports of products whose inputs have been threatened by disruption from the war, worsening shortages and adding to higher ⁠prices ⁠around the world.

International urea prices have risen by around 40% from pre-war levels. In China, urea futures are near a 10-month high.

Dependent on China

Fertilizers are essential for plant growth and crop yields. Higher prices could lead to reduced usage, or farmers could switch to crops that require less fertilizer.

Last year, China sent Brazil, Indonesia and Thailand roughly a fifth of their fertilizer imports and that figure stood at a third for Malaysia and New Zealand, according to International Trade Centre data. For India, it was around 16%, according to its trade data.

Between half and 80% of those exports are now restricted, according to a Reuters analysis of Chinese customs data.

“Buyers were hoping ⁠China would step in and fill the supply gap, but this decision will only tighten supplies further,” a New Delhi-based fertiliser company official said, in reference to the recent restrictions.

The company official declined to be named due to the sensitivity of the matter.

India, which imported more ​than 40% of its urea, a nitrogen-based fertilizer, and DAP, a blend, from the Middle East last year, has requested China ​issue export quotas for urea.

When will exports resume?

The Philippines on Wednesday said China had assured it that fertilizer exports would not be restricted.

Asked about the comments a day later, China’s Ministry of Foreign Affairs spokesperson referred ⁠the question ‌to other departments.

China’s ‌General Administration of Customs, National Development and Reform Commission and Ministry of Commerce did not ⁠immediately respond to requests for comment.

At a fertilizer conference in Shanghai ‌attended by Reuters on Wednesday, five salespeople said they did not expect the fertilizer bans to be lifted before August, after China’s peak June-to-August export ​period.

Producers are watching for signals from the ⁠government after spring planting to see whether bans would be extended.

In December, the state-linked ⁠fertilizer association urged major producers to suspend exports of phosphate fertilisers until August.

“Most folks who follow this very, very closely ⁠are expecting them to continue ​to extend the export bans,” said Caitlin Welsh, a director at the Center for Strategic and International Studies.

“China is so reluctant to do anything that would increase the price of grains, especially animal feed, domestically.”

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The European Union proposed to Türkiye last month the idea that the candidate for bloc membership could join a cost-cutting payments system to boost integration efforts and benefit those sending money abroad, according to a report on Thursday quoting the EU envoy to Ankara.

Jurgis Vilcinskas, the bloc’s chargé d’affaires in Türkiye, said European Commissioner for Enlargement Marta Kos discussed the proposal with Foreign Minister Hakan Fidan when the two met last month in Ankara.

The EU says its 41-country Single Euro Payments Area (SEPA) makes cross-border euro-currency payments cheaper, faster and more secure. Users in far smaller Balkan candidates, Albania, Moldova, Montenegro and North Macedonia, which adopted the scheme last year, could save up to 500 million euros (around $573 million), it said.

“SEPA could present a valuable opportunity to strengthen Turkiye’s economic integration as a candidate country and a key trade and economic partner of the EU,” Vilcinskas told Reuters in a response, using the Turkish spelling of the country’s name.

It could generate “significant savings annually for Turkish businesses, consumers and diaspora by making cross-border transfers in euros as fast and as cheap as domestic ones,” he said.

Ankara’s view on the matter is unclear.

A Turkish diplomatic source confirmed that during the visit by Kos on Feb. 6, an offer had been conveyed to Ankara, adding the SEPA issue was under the jurisdiction and coordination of the Finance Ministry, which did not immediately comment on the matter.

Steps eyed to bolster economic ties

Under SEPA, Turkish banks could stand to lose revenues on transfers, which vary widely based on size. A Türkiye-Europe transfer of 1,000 euros to 5,000 euros can cost 40 euros, according to Western Union.

Europe is Türkiye’s largest trading partner with more than 200 billion euros in volume. With bloc membership talks effectively stalled for years, both say they want to modernize their customs union and move to boost economic ties.

Trade Minister Ömer Bolat recently reiterated the goal of modernizing the customs union, a decades-old framework, to better suit the present needs. Ankara has also been accepted into the new “Made in Europe” industrial policy, a move seen as reinforcing the economic and trade ties between the duo.

SEPA could bring “significant” savings, especially for the large Turkish diaspora across Europe, a Turkish banking source said.

In an interview this month, Odile Renaud‑Basso, the president of the European Bank for Reconstruction and Development (EBRD), said SEPA would “basically make transactions cost-free.”

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The ongoing conflict in the Middle East is leaving numerous consequences on the global economy and commodity markets. Here is the breakdown of the latest events on Wednesday:

Iraq resumes oil exports via Türkiye

Iraq announced it had resumed limited oil exports through the Turkish port of Ceyhan, using a pipeline that avoids the effectively shut Strait of Hormuz.

The state-owned North Oil Company said it was sending an initial 250,000 barrels a day from its fields in the northern Kirkuk province through the pipeline, well below the 3.5 million barrels a day it has shipped in normal times from its southern Basra fields via the Strait of Hormuz.

Oil prices dip

Oil prices fell following Iraq’s announcement.

The WTI benchmark was down about 1.5% at $94.7 a barrel in volatile trading, even as the United States hit Iranian missile sites near the key Strait of Hormuz and Tehran struck back at crude-producing Gulf neighbors.

Stocks rose in Asia, and opened higher in Europe, also lifted by renewed interest in tech shares.

Japan, S. Korea petrochemical industry slows output

The Middle East war is forcing petrochemical giants in key Asian economies to cut production as the conflict rattles supplies of naphtha, a crucial oil-derived component used to make a range of plastic goods.

Mitsubishi Chemical and Mitsui Chemicals have cut output, Shin-Etsu Chemical said it would raise prices, and LG Chem warned it may not be able to fulfil some orders.

Emergency shipping talks

The International Maritime Organization (IMO) will begin an “extraordinary session” on Wednesday to discuss shipping amid the war.

The IMO’s 40-member council could vote Thursday on several proposed resolutions, including one to “establish a safe maritime corridor to allow the safe evacuation of seafarers and ships stranded in the Persian Gulf.”

However, if passed, resolutions remain non-binding.

South Korea secures oil from UAE

South Korea said it would receive an additional 18 million barrels of oil from the United Arab Emirates (UAE) through alternative supply channels, bypassing the need to use the Strait of Hormuz.

The presidential chief of staff declined to elaborate on the route.

About 70% of South Korea’s oil imports normally pass through the strait.

Fed kicks off series of central bank meetings

The U.S. Federal Reserve (Fed) later Wednesday kicks off a string of central bank meetings that will be closely watched for signs of how monetary authorities view the inflationary impact of higher oil prices.

The Fed is not expected to touch its rates, even as signs grow of a weakening labor market.

The European Central Bank (ECB) and the Bank of England (BoE) meetings are also due on Thursday.

Sri Lanka asks EVs to unplug

Sri Lanka, meanwhile, has urged electric vehicle owners to stop charging their cars at night, saying the surge in demand is forcing the country to burn more coal and diesel to keep the power grid running.

Faced with an energy crisis driven by the war, Sri Lanka has begun rationing fuel and has also imposed a four-day working week starting Wednesday in a bid to reduce travel.

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