Tensions surrounding Iran continue to rise over the weekend.
Washington is preparing a new round of sanctions, Tehran is calling them illegal, and the Strait of Hormuz remains nearly blocked, with shipping traffic severely restricted.
Right now, Hormuz is more important than the political statements coming from either side.
Once one of the world’s most important energy corridors is disrupted, markets are no longer focused only on Iran. They start looking at oil prices, inflation, shipping costs, marine insurance, and eventually what all of this could mean for monetary policy.
For gold, this kind of environment is usually worth watching. Not only because of geopolitical risk, but also because a prolonged rise in energy prices could make the fight against inflation more difficult again.
I wouldn’t draw any major conclusions yet. But if shipping restrictions in Hormuz persist over the coming weeks, markets will find it increasingly difficult to ignore them.
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