"When gold breaks historical highs in a short period, the key message the market sends is that precautionary demand outweighs all other considerations, including yield assessments and opportunity costs."
"From my perspective, the most dangerous aspect of these developments is not the military event itself but the prolonged uncertainty. Markets can absorb sudden shocks, but they react more strongly to open-ended conflicts lacking a clear timeline."
"In my opinion, this confirms that the geopolitical factor temporarily outweighs the monetary factor, and investors prefer hedging against systemic risks even if the cost of holding a non-yielding metal rises."
Gold prices have broken through $5,300 per ounce and approached $5,375, reflecting a comprehensive repricing of geopolitical risks amid escalating U.S.-Iran tensions and potential Middle East conflict expansion. This surge represents precautionary demand overwhelming other market factors, including yield assessments. Trump's statements about continuing operations intensify market anxiety. The prolonged uncertainty surrounding open-ended conflicts poses greater market risk than sudden shocks. The geopolitical risk premium embedded in gold will persist as long as escalation rhetoric continues. Rising oil prices simultaneously boost gold's safe-haven appeal while creating inflation concerns that could affect Federal Reserve policy. Gold's current strength despite lower rate-cut expectations demonstrates that geopolitical factors temporarily dominate monetary considerations, with investors prioritizing systemic risk hedging.
Read at London Business News | Londonlovesbusiness.com
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