Gold price wins in Iran war, but not copper

The U.S.-Iran war may shave as much as 0.7% off the global economy and push gold prices higher as investors focus on a swelling U.S. deficit and a weaker dollar, according to Red Cloud Securities.

Higher fuel costs and a darker outlook for industrial metals are also emerging risks for miners, commodity strategist Kenneth Hoffman said in a sector note on Friday, as diesel prices spike and global growth forecasts soften.

“We still believe in a precious metals bull market,” Hoffman said. “An unwinding of the positions in the dollar and a short position in gold could unravel over the next few weeks, sending the gold price significantly higher.”

The world economy has been hit by stubbornly high prices for gasoline, diesel and jet fuel since the conflict began Feb. 28, even if prices ease from recent peaks. Toronto-based Red Cloud estimates the war could leave global GDP between 0.4% and 0.7% lower than it would have been otherwise, weighing on demand for copper and other industrial metals.

Budget deficit

The bigger long-term issue may be Washington’s finances, Hoffman said. U.S. President Donald Trump’s latest budget assumes aggressive tariff collections while boosting defence spending by 50% to $1.5 trillion, a mix that could widen the federal deficit and undermine the dollar. That could support bullion further, particularly if the next Federal Reserve chair due in May is more willing to cut rates.

Even so, Hoffman cautioned that a calmer geopolitical backdrop later this year, or political pressure on Trump ahead of the U.S. midterms, could temper bullion’s rise. That could mean the next few months may be stronger for gold than the latter half of 2026, though policy unpredictability in Washington remains a key wild card, Red Cloud said.

For miners, the most immediate concern may be costs. Red Cloud said it will be watching first-quarter results closely for signs that higher diesel prices are beginning to squeeze margins.

“How the world reacts to the end of the Iranian conflict, and how the economy recovers, will go a long way towards telling us where base metal prices will go for the rest of 2026.”