What if the largest threat to global markets is not an oil price shock, but a prolonged conflict leading to a deeper US involvement in the war effort, with ultimate implications for defense spend and thereby for the fiscal outlook, TDS’ Senior Commodity Strategist Daniel Ghali notes.
Markets face deeper risk from US war involvement
“Gold remains the lowest-risk expression of a MidEast geopolitics hedge.”
“The optionality for further price increases now appears excessively cheap with potential catalysts ranging from safe-haven inflows tied to further geopolitical escalation, resumed interest rate cuts in the event of a complete about-face on trade, a stagflationary environment in the event of a continued trade war, challenges to central bank credibility with Chair Powell’s term coming to an end within a year or resumed Asian currency depreciation pressures.”
“We see echoes of January 2024, even as Gold prices remain only a nudge below all-time highs.”
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