FLASH
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On Monday, financial investors showed calm and restraint, despite the escalation of the conflict between Israel and Iran. Even a rumor about the possibility that the Iranian regime is seeking new negotiations on its nuclear program, if confirmed, was interpreted as a sign of silent capitulation and significantly improved the climate in the markets.
Brent oil prices fell 1.5%, European sovereign bond yields also fell, and major stock markets rose, with the exception of Moscow, which benefited from higher oil prices on Friday.
An international system without leaders even in finance
When this wave of destabilization passes, many will have to admit that the reaction of the markets reveals the changing international architecture: a world without clear leadership in war strategy, and now, even without clarity in global finance.
Investors' flight to "safe assets," a classic reaction in times of crisis, has been different this time than in the past. It seems that confidence in major economies and global currencies like the dollar, euro, and yuan is more shaky than before.
Dollar, Euro and Gold: Who Maintains the Trust of the Markets?
The US dollar had an immediate surge in the first hours of the attacks, but then fell in value, ending the day just 0.3% above its pre-attack level – a signal that it is no longer the absolute support of investors.
US Treasuries suffered significant selling, both on Friday and Monday, due to high public debt and institutional uncertainty in the US. In contrast, European bonds were bought as a more stable alternative.
The euro, although more stable, is still not seen as an ideal haven, due to financial fragmentation among eurozone member countries.
Gold, by contrast, rose 1.77% on Friday alone, approaching an all-time high and confirming its status as the "currency of last resort" in uncertain times.
The Era of G-Zero: Gold Takes the Place of Global Currencies
The financial world is moving ever closer to the concept of “G-Zero,” described by analyst Ian Bremmer, a world without a leading global power. A recent report by the European Central Bank shows that the share of the dollar and yuan in international reserves is falling, while the euro is not growing. Only gold is gaining ground, and has already surpassed the euro in terms of weight in global monetary reserves.
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