This week, the Arab world’s biggest powers cut ties with Qatar. What does it mean for the gold market?

On Monday, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed diplomatic relations with Qatar (Yemen, the Maldives, Libya and Mauritania followed suit). They also suspended air, land and sea travel to and from the country, triggering food hoarding in anticipation of supply shortages (about 80 percent of Qatar’s food demand is satisfied by produce from abroad).

The diplomatic crisis came a few weeks after Qatar’s ruling emir, Tamim bin Hamad Al Thani, was allegedly quoted praising Israel and Iran, two Saudi Arabia’s biggest adversaries in the region. Qatar was also accused of backing radical Islamist groups like the Muslim Brotherhood and ISIS. In short, the countries of the region did not like Qatar’s activist foreign policy. Last but not least, Donald Trump visited Saudi Arabia last month and seemed to embrace the country and its policy.

Anyway, the current rift is probably the biggest diplomatic crisis in the region since the Gulf War in 1991. It increases tensions over the Middle East, which should support the price of gold. Geopolitical worries are not the key, long-term drivers of the gold prices, but they could increase the current significant uncertainty before “Super Thursday” (however, on Tuesday Qatar said that it would not retaliate and it was ready for mediation to ease the crisis – so the conflict is not going to escalate further, which is bad news for the gold market).

As a reminder, three important events are scheduled for tomorrow: the British general election, Comey’s testimony and the ECB monetary policy decision. Although Draghi is not expected to change interest rates or quantitative easing this week, he may signal the future stance of the ECB. Conservatives are still expected to win, according to the polls, but their lead over the Labour Party has recently diminished significantly. Comey’s testimony could be potentially the most disruptive, as it’s the biggest unknown and traders are currently very sensitive to what is going on around Trump.