As March 2026 unfolds, a confluence of geopolitical shockwaves and central bank repositioning has sent the US dollar surging, while gold stumbled from record highs — a tale of two safe havens sharply diverging overnight.
Unfortunately for the Philippines, an oil-import-dependent and dollar-exposed economy, the timing could not be worse.
The local bourse, already battered by years of foreign outflows and tepid domestic sentiment, is now staring down yet another headwind it can ill-afford.
The casualties and the aftermath
The US-Israeli strikes on Iran in early March sent shockwaves through global markets, driving oil prices up roughly 60 percent year-to-date amid heightened concerns over potential supply disruptions in the Strait of Hormuz.
For the Philippines which imports around 90 percent of its crude oil, this is not just a distant global story—it directly affects every Filipino’s wallet as imported inflation pushes up pump prices and other costs.
As household budgets tighten from the sharp increase in the cost of basic goods and services, expect another year of slowed economic activity. Companies heavily dependent on oil for logistics will suffer the most, as weaker consumer demand drastically reduces sales and earnings.
Compounding the pain, the Fed held its policy rate at 3.50 percent–3.75 percent, with markets now pricing in only one cut for 2026—pushed back from July to September—after an upward inflation revision from 2.4 percent to 2.7 percent, driven partly by fuel-led price pressures.
Further, AI-driven labor retrenchments in the US tech sector softened the country’s labor market, but not enough to tip the Fed’s hand.
The aftermath?
Wall Street indices responded in kind: the S&P, Dow, and Nasdaq slid in unison, while the dollar index rallied from the lows of 96 to near the 100 level. The oil shocks served as a stark reminder that beneath the rate and inflation expectations, the world runs on oil — and oil still runs on dollars.
Gold blinks first
Paradoxically, gold fell too. The yellow metal declined by approximately 15 percent—briefly hovering near the $4,000/oz psychological level before bouncing back to $4,500/oz—following the initial US airstrikes on Iran, which killed the country’s Supreme Leader, Ali Khamenei.
While gold is typically considered a safe-haven asset, several factors drove its decline despite the geopolitical crisis: a stronger US dollar, which made gold more expensive in other currencies; investors offloading positions to raise liquidity or shift into more attractive dollar-denominated assets; and speculative activity that further amplified the downside.
Patience and ammunition
For now, the dollar is the loudest voice in the room, but none of this is permanent. Gold’s structural bull case remains intact, and the same drivers fueling the dollar today — elevated rates, geopolitical anxiety, and hawkish Fed rhetoric — are double-edged. A de-escalation in the Middle East, softer US inflation prints, or any Fed pivot signal could gradually reverse the tide.
Until then, shift toward cash or defensive stocks, prioritize necessities, and keep dry powder ready. Opportunities come and go—especially in the PSE where rewards are only handed to the most selective and prepared.
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