The collapse in oil prices at the start of the week – including a negative price in the Nymex spot month – has ramifications for gold, pointed out Metals Focus. Several countries rely on oil exports for the bulk of their revenue, meaning a hit to the global economy.

This will also hurt equity markets, since the energy sector has a significant weighting in global indices, the consultancy said. Weaker oil prices will also feed through into inflation expectations.

“Turning to the geopolitical ramifications of low oil prices, historically, long periods of depressed prices have created political and regional instability in the Middle East as countries grapple with falling revenues,” Metals Focus said.

Already, there are some tensions, such as the fallout between major oil producers Saudi and Russia on an OPEC deal and ongoing U.S.-Iran tensions. Further, the outsized losses in oil positions could deter investment in the broad commodity funds and exchange-traded funds that invest in a wide range of commodities, including precious metals.

“On balance, the factors discussed above are largely positive for precious metals, especially gold, which benefits the most from increases global risk aversion,” Metals Focus said. “While a deflationary environment is theoretically unsupportive for gold prices, the current backdrop of heightened market volatility and associated slump in equities will outweigh the downside pressures for gold.

From an investment standpoint, even though broad commodity ETFs may suffer outflows owing to slowing global growth, institutional interest in gold is likely to remain strong as a result of rising safe-haven demand and also in an era of record low interest rates and massive central-bank stimulu