Please see the below article from Tatton Investment Management detailing their discussions on markets, gas supply chain, and gold. Received this morning 30/03/2026.
Markets hold their breath
Donald Trump’s ‘peace plan’ for Iran and the negotiations via Pakistan gave markets a smidgen of positivity. TACO traders were not surprised that Washington postponed last weekend’s ultimatum (reopen the Strait of Hormuz or see energy infrastructure destroyed) but it suggests the existence of a boundary around attacking energy infrastructure. Still, a halt to escalation doesn’t mean de-escalation: the US is still sending thousands of troops to the Middle East, and Tehran clearly doesn’t believe the peace plan is real (neither do betting markets). It’s a soggy TACO at best, and in the meantime oil and gas still can’t clear the Strait. As the week’s trading begins, Brent has reached a new recent high, just above $116 per barrel for the front month delivery of May. If this continues, energy prices will climb even further and global growth will be harder hit.
The first business sentiment surveys since the war began confirmed that European and Asian companies are worse hit than their American counterparts – as you’d expect with sharply different supply dependencies. Lower growth expectations should mean lower bond yields but, with the exception of China, the opposite has happened. Bond traders are pricing in a big inflation shock, but a curiously low growth impact (judging by real yields). That could change. Even though central banks two weeks ago sounded the inflation alarm, last week they turned more growth conscious and so long-term yields might take the hint and fall in due course.
That easier central bank messaging loosened the liquidity squeeze, which is another reason stocks found some relief early last week. We saw that in gold prices too (covered below). Holders of speculative assets are under less pressure – even the ailing private credit sector. Thankfully, there’s no sign of contagion to publicly traded bonds from recent private credit fund closures. This is all good news, but could change this week. It’s the quarter-end, financial year-end, and Easter weekend to boot. Light trading means tighter liquidity, potentially amplifying small selloffs. Things could therefore get nervy this week, if only for technical reasons. For now, markets are in stasis.
Europe’s surprising gas supply
European natural gas prices have risen around 55% during Iran war – but US prices are about the same. Europe’s gas premium over the US fell through 2025, but disrupted Middle Eastern flows have left Europe paying more than six times the US. Since 2022, Europe has become increasingly reliant on Liquid Natural Gas (LNG) imports, mostly from the US. (Norway provides more gas overall, but US LNG is often the swing factor). Now, LNG shipments across the Atlantic seem to be at capacity. That means oversupply in the US, and undersupply here and on the continent.
And yet, Europe’s gas storage position has actually improved, on a seasonally-adjusted basis, in the last few weeks. European gas storage was running at the low end of its seasonal range pre-war – partly due to a cold snap and partly due to LNG shipments allowing a ‘just-in-time’ model of gas provision. We noted in February that Europe’s underlying supply balance was improving, and that’s continued despite everything. That’s all about the weather. An early spring lessens heating needs and ends the dreaded ‘Dunkelflaute’ (no wind or sun), meaning renewables have been able to pick up more of the slack.
That suggests Europe’s gas price spike is more about fear of disruption than disruption itself. However well-founded those fears, this means that de-escalation in the Middle East (without long-term production damage) would see gas prices flip back toward oversupply. Russian gas flow has also been relatively undisturbed in the last few weeks, as Washington seems more relaxed about Russian oil and gas exports. European leaders won’t like that, but it does point to a better gas price outlook than feared.
Energy prices are crucial to Europe’s outlook. Comparatively low US prices have seen US stocks fare relatively better in recent weeks, but de-escalation could quickly turn that around.
Gold’s not-so-safe haven
Gold, the stereotypical ‘safe haven’ asset, has fallen sharply since the outbreak of the Iran war. This might be the natural disaster effect: if you hold safe assets for a rainy day, you sell them when it starts to rain. That’s why gold often sells off in market panics – and it’s exacerbated by the previous two-year rally. It’s become correlated with speculative assets, making prices more volatile. An inflationary oil shock should mean higher gold prices but higher expected interest rates counteracts that. Gold has become something of a liquidity drain post-pandemic. Central bank tightening would mean less liquidity, hence weaker gold.
Speculative trading amplified the fall, but what triggered it? It seems to have been the rumour that central banks or sovereign wealth funds might sell gold reserves – most likely gulf nations needing liquidity while oil exports are blocked. That’s the opposite of what happened post-Ukraine. From 2022, central banks (particularly emerging markets) built gold reserves out of fear they, like Russia, might be frozen out of the global dollar system. But historically high gold prices are a good opportunity to cash in. There’s no evidence that’s actually happening (though there wouldn’t be) but the rumour prompted selling.
Volatility doesn’t undermine gold’s safe haven status. A safe haven asset is something real you can sell in a disaster; a safe haven trade is a bet that something will make you money in times of panic. Recent gold price volatility certainly doesn’t take away gold’s safe haven status, and history suggests the safe haven trade rarely works anyway. This is the same reason we have always argued against gold as an investment (even when it was surging): it’s impossible to value in the same way as stocks or bonds. There’s a good chance gold recovers from the selloff, but we will continue to prefer traditional investment assets.
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Alex Clare
30/03/2026