Gold is teetering dangerously close to bear market territory, with prices falling 19% from their January peak as the Strait of Hormuz chokepoint sparks an international energy crisis and triggers more stagflation fears, Bloomberg reports. It’s not just gold — bonds, another typical hedge, have been caught in a rout since the start of the war, while BTC is at roughly half its pre-war peak.

Gold-backed exchange-traded funds (ETFs) are also slated for the largest outflow in nearly four years following an almost 14-month-long rally, with all inflows of this year already erased, Bloomberg reported elsewhere.

Still, some are buying the dip: Gold prices ticked up 3% higher by market close on Friday after banks and money managers stepped in. Persistently high inflation and fiscal tightening are among key factors that continue to make gold attractive, Fidelity International’s George Efstathopoulos told the business news service.

But other headwinds could keep pressuring prices: Central banks could also start offloading gold holdings to prop up currencies, with Turkey already starting to sell and swap over USD 8 bn worth of gold reserves to the same end. Energy import-dependent countries are among those that have accumulated gold holdings recently, and they might look to sell them off in an environment of sustained high oil prices to shore up funds.

However, for now, a slowdown in accumulating reserves rather than a full-blown selloff is more likely, TD Securities’ Daniel Ghali said. Citigroup’s Max Layton expects gold to be higher within a year following a temporary shakedown.

MARKETS THIS MORNING-

Asia-Pacific markets are down sharply in early trading this morning as the regional war shows no signs of slowing down. Japan’s Nikkei is down over 4.6%, and South Korea’s Kospi is down 3.8%. Over on Wall Street, equity futures are in the red as investors await the March job report out at the end of the week.

ADX

9,597

-0.1% (YTD: -4.0%)

DFM

5,511

-0.1% (YTD: -8.9%)

Nasdaq Dubai UAE20

4,533

-0.2% (YTD: -7.3%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

3.4% o/n

3.9% 1 yr

TASI

11,076

-0.1% (YTD: +5.6%)

EGX30

46,404

-1.3% (YTD: +10.9%)

S&P 500

6,369

-1.7% (YTD: -7.0%)

FTSE 100

9,967

-0.1% (YTD: +0.2%)

Euro Stoxx 50

5,506

-1.1% (YTD: -4.9%)

Brent crude

USD 116.55

+3.5%

Natural gas (Nymex)

USD 3.03

+3.3%

Gold

USD 4,524

+2.6%

BTC

USD 65,841

-0.8% (YTD: -24.9%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.56

-2.7% (YTD: -5.1%)

S&P MENA Bond & Sukuk

148.74

-0.4% (YTD: -2.1%)

VIX (Volatility Index)

31.05

+13.2% (YTD: +107.7%)

THE CLOSING BELL-

The ADX fell 0.1% on Friday on turnover of AED 683.5 mn. The index is down 4.0% YTD.

In the green: Gulf Medical Projects Company (+7.7%), GFH Financial Group (+6.2%), and United Arab Bank (+4.0%).

In the red: Abu Dhabi National Co. for Building Materials (-4.7%), Orascom Construction (-4.0%), and Rapco Investment (-3.8%).

Over on the DFM, the index fell 0.1% on turnover of AED 706 mn. Meanwhile, Nasdaq Dubai was down 0.2%.

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