Damascus, March 16 (SANA) Rising tensions in the Middle East have boosted the U.S. dollar as investors shift away from riskier assets toward safer, more liquid holdings. The currency has gained about 2.5 percent, driven by growing geopolitical uncertainty and concerns that fighting could disrupt key trade and energy routes.
The dollar typically strengthens during periods of global instability, when market volatility increases demand for safe-haven assets. Its rise has also been supported by higher energy prices, as oil and natural gas are largely priced in dollars, boosting global demand for the currency among fuel-importing countries.
Gold, which often benefits from geopolitical tensions, has struggled to maintain its gains. After rising when military operations began in the Gulf region, the metal later came under selling pressure, dropping from about $5,423 per ounce to roughly $5,085.
Ross Norman, chief executive of the consultancy Metals Daily, told CNBC that the stronger dollar and rising U.S. Treasury yields had reduced gold’s appeal to investors.
According to an analysis by Agence France-Presse, the dollar’s strength during geopolitical crises rests on several structural factors, including its status as the most widely used currency in global trade and central bank reserves, as well as the depth and liquidity of U.S. financial markets.
The United States’ position in global energy markets also plays a role. As the world’s largest oil producer, it imports only about 8 percent of its energy from the Gulf region, with roughly two-thirds of its imports coming from Canada, reducing its exposure to Middle East supply disruptions.
Higher energy prices could also increase inflation pressures, potentially influencing monetary policy. If inflation remains elevated, the U.S. Federal Reserve may slow the pace of interest-rate cuts, a scenario that tends to support the dollar against other currencies.
However, some analysts warn that the dollar’s appeal could weaken if U.S. budget deficits expand due to increased military spending. Financial analyst Kathleen Brooks said such pressures could challenge the dollar’s strength in the longer term.
R.D
