Key Takeaways
- Gold prices surged 4% to $4,514.50 per ounce following President Trump’s decision to extend the deadline for ceasefire negotiations, while Spot Silver jumped nearly 5% to $71.62.
- Iran’s Khondab heavy water research reactor was hit in an air attack; while no injuries were reported, the strike on critical infrastructure has heightened regional instability.
- Federal Reserve officials Paulson and Barkin signaled a "wait-and-see" approach on interest rates, citing "fragile" inflation expectations and the unclear economic impact of Artificial Intelligence.
- US officials warned allies that the conflict in Iran could delay weapons shipments to Ukraine, as the Pentagon prioritizes resources for the escalating Middle East crisis.
- QatarEnergy (QATAR) announced it will cancel 10 LNG cargo deliveries between April and June, adding further pressure to global energy markets.
Safe-haven assets rallied sharply on Friday as geopolitical tensions in the Middle East reached a fever pitch. Gold (GLD) climbed 4% to reach $4,514.5 per ounce, a move triggered by President Trump’s extension of the ceasefire talks deadline. Investors reacted to the prolonged uncertainty, while Spot Silver (SLV) followed suit, rising nearly 5% to trade at $71.62 per ounce.
The market volatility comes as military action inside Iran intensifies. An official from Fars News confirmed that Iran’s Khondab heavy water research reactor was targeted in an air attack, though local residents face no immediate threat. Meanwhile, state media outlet ISNA reported that damage at the Mobarakeh steel plant is currently under review following separate strikes, signaling a widening scope of industrial targets.
Diplomatic efforts remain on a knife-edge as Iran is expected to reply to a US peace proposal later today. While White House officials are reportedly "cautiously hopeful" about the negotiations, Senator Marco Rubio stated that the US objective remains the total elimination of Iran’s ballistic capabilities. French Foreign Minister Jean-Noël Barrot declined to endorse Rubio’s rhetoric, highlighting potential rifts among Western allies regarding the war's ultimate goals.
The conflict is already having a tangible impact on global logistics and defense. US officials have warned allies that the Iran war may delay scheduled weapons shipments to Ukraine, according to reports from Politico. Simultaneously, energy supply chains are tightening as QatarEnergy (QATAR) confirmed it will not deliver 10 LNG cargoes during the second quarter, citing the ongoing regional crisis.
At the Federal Reserve, officials are grappling with how these geopolitical shocks will affect the domestic economy. Fed Governor Paulson stated that the Iran war threatens both growth and inflation stability, noting that inflation expectations remain "fragile." Paulson estimated the neutral rate (R-star) to be near 3.1%, suggesting that higher-than-expected inflation would make it significantly harder for the Fed to support growth.
The role of technology in the economy also remains a point of contention for central bankers. Fed's Barkin noted that the rapid pace of AI changes has created "unease" among officials, making the economic outlook increasingly unclear. While companies like Nvidia (NVDA) and Microsoft (MSFT) continue to drive investment, Paulson argued it is not yet clear how much AI is contributing to actual productivity gains.
Barkin emphasized that the labor market appears "fragile" despite low unemployment, with companies reporting minimal wage pressure. Given the rising gas prices and the "narrow" demand fueled by wealthy households and AI investments, Barkin suggested it is wise to keep interest rates unchanged for the time being. The Fed continues to monitor data closely as the combination of war and technological shifts complicates the path forward.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.