Iran-Israel conflict: UBS on where to invest in stocks, gold, silver, oil

UBS sees further upside for broad commodities in 2026, driven by primarily by metals, their analysts said in a recent note.

The ongoing geopolitical developments in West Asia have kept global financial markets, including commodities, on edge in the last few days. 

 

As equities suffered, investors sought refuge in safe-haven assets like gold and silver. Crude oil prices gained ground in the last few days as the ongoing conflict as the Strait of Hormuz, used to transport 20 per cent of global energy needs, remained effectively closed for a fourth consecutive day on Wednesday.  

 

The strikes have also led to airspace disruptions across the Gulf. Major airports in Dubai and Doha suspended operations over the weekend, with Emirates, Etihad, and Qatar Airways halting most flights.

 

 

That said, analysts expect financial markets to remain volatile over the next few days amid geopolitical uncertainty. 

 

UBS’ base case remains that there will be only a brief disruption to the global supply of energy and any initial rise in the price of oil to reverse, at least partially, once it becomes clear that supply disruptions are temporary, critical oil infrastructure is not destroyed, and the need for continued military action fades. 

 

“In this scenario, markets may be volatile over the coming weeks but would likely thereafter start to refocus on positive global economic fundamentals. This would be in line with the impact of most geopolitical shocks in recent history,” wrote Mark Haefele, Global Wealth Management Chief Investment Officer at UBS in a recent note.

 

Where to invest?

 

Making snap decisions to de-risk portfolios amid geopolitical conflict has historically not been a profitable strategy, UBS said. 

 

In line with their base-case view that the ongoing conflict in West Asia will not lead to sustained global economic disruption, investors, UBS advised, should maintain a long-term focus, stay invested in broad equity indices, and use periods of volatility to build more diversified portfolios. 

 

 

While equities may take a risk-off tone in the initial reaction to the military escalation, the overall backdrop for equities remains positive, UBS said, with robust US economic growth, strong corporate earnings growth, and high levels of fiscal spending around the world supporting a further 10 per cent rise from current levels by end 2026. 

 

“Alongside more gains for US indices, we see further upside for Europe, Japan, China, and emerging markets in 2026, making a global equity allocation attractive. In APAC, we believe China (including China tech), India, Australia, and Japan will be among the areas driving the next leg higher,” Haefele said.

 

Outlook for crude oil, gold, silver

 

UBS sees further upside for broad commodities in 2026, driven by primarily by metals. The fast-moving nature of events in West Asia, UBS said, increases the appeal of actively managed commodity strategies, given increased intra-commodity market volatility.

 

"We also believe a modest allocation to gold, of up to a mid-single-digit percentage of total assets, can enhance diversification and buffer against geopolitical risks. Adequate exposure to quality fixed income and alternatives such as hedge funds can help reduce portfolio volatility and limit the impact of shocks," Haefele wrote.

 

Impact on interest rates

 

Another worrying factor for investors, according to UBS, would be that an oil price-driven increase in inflation could cause top central banks to move toward rate hikes. 

 

Comments by top central banks over recent years, the note said, have suggested an eagerness not to overreact to one off increases in price levels, including most recently from higher US tariffs.

 

“Nevertheless, central banks will also be mindful of the risk that inflation expectations increase, particularly given the experience of 2022-23,” UBS said.

 

On GDP growth, higher oil prices, UBS believes, would affect consumers and firms through higher costs, similar to an increase in taxes. Oil markets, it said, tend to be self-correcting with supply increasing as prices rise; hence UBS does not expect any price spike in crude oil to have a lasting impact on growth. 

 

"However, if higher prices were sustained, we estimate that the negative impact on oil importing economies would be measured in basis points and would likely fade after a few years," Haefele wrote.