IMF warns of economic strain as crude surges towards $125, gold falls

Rising geopolitical tensions in the Middle East are beginning to ripple through the global economy, with the International Monetary Fund warning of mounting inflation risks and a potentially severe economic outlook.

Speaking on the issue, International Monetary Fund (IMF) Managing Director  Kristalina Georgieva said the ongoing conflict has already started pushing inflation upward, largely driven by surging energy prices. However, she noted that long-term inflation expectations remain relatively stable for now.

Georgieva cautioned that the situation could deteriorate significantly if the conflict drags on. In a worst-case scenario where the war continues through 2027 and oil prices climb to $125 per barrel, the global economy could face serious strain. She stressed that while the most critical phase has not yet been reached, risks remain elevated due to persistent geopolitical uncertainty.

GOLD PRICES IN PAKISTAN FALL

The economic pressure is also being reflected in commodity markets. In Pakistan, gold prices saw a notable decline, with 24-karat gold per tola dropping by Rs3,800 in a single day, according to the All Pakistan Sarafa Gems and Jewellers Association. Prices for 10 grams of gold and silver also recorded decreases in both local and international markets.

Globally, gold prices fell by $38 per ounce, while silver also edged lower. Analysts suggest the dip may reflect short-term market adjustments as investors react to shifting expectations around inflation, interest rates, and geopolitical developments.

Despite the temporary decline in precious metals, the broader outlook remains uncertain, with energy prices and ongoing conflict continuing to pose risks to economic stability worldwide.