|

Gold: Geopolitics reinforces safe haven bid – ING

ING’s commodities strategists Ewa Manthey and Warren Patterson say Gold is pushing higher as markets react to escalating tensions between the US, Israel and Iran. They stress that Gold’s safe-haven role is reinforced by contained real yields, strong central bank buying and expectations of policy easing, suggesting any downside should be limited even if tensions stabilise.

Safe haven demand underpinned by risks

"Gold is pushing higher on Monday as markets reopen to the weekend’s escalation between the US, Israel and Iran. Renewed tensions inject a fresh geopolitical risk premium at a time when investor positioning was already constructive."

"This reinforces gold’s role as a preferred hedge. Near-term price action is likely to remain headline-driven, with volatility elevated."

"If higher crude prices lift inflation expectations, while growth risks rise, real yields are likely to remain contained – and supportive for gold. A firmer dollar, however, could slow the pace of gains."

"A regional spillover or disruption to energy supplies would materially boost gold through higher oil prices, increased inflation expectations and contained real yields. Sustained uncertainty would keep volatility and safe-haven demand elevated. By contrast, if tensions remain contained and energy flows are unaffected, the initial risk-off move should fade as the oil risk premium unwinds."

"This reinforces, rather than changes, the broader gold narrative. Central bank buying remains strong and expectations of policy easing later this year continue to underpin the market. Even if tensions stabilise, these structural drivers suggest downside should be limited, with any pullbacks likely to be shallow rather than trend-reversing."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD picks up bids above 0.7100 after RBA-speak

AUD/USD picks up bids above 0.7100 in the Asian session on Tuesday, following hawkish comments from RBA Assistant Governor Sarah Hunter and Governor Michele Bullock. However, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, which could limit the pair. The crucial Trump-Xi summit is later this week and remains in focus.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold  battles $4,300 amid hawkish Fed, Iran risks

Gold turns lower for the second consecutive day following a modest intraday uptick, challenging the $4,315 region, or a three-day low in the European session on Tuesday. The US Federal Reserve's hawkish outlook is seen as a key factor driving flows away from the non-yielding yellow metal.

Bitcoin pauses rally as profit-taking reaches yearly high

Bitcoin takes a breather, facing a pullback, trading below $85,500 on Tuesday after surging 6.7% the previous day. Strong institutional demand supports the bullish price action, with spot Bitcoin Exchange Traded Funds recording nearly $1 billion in inflows on Monday and Strategy adding 950 BTC to its treasury.

Energy and risk markets remain in the driver’s seat
US stock markets rallied up 2.26% (Nasdaq) yesterday with AI/tech names leading the advance. The Nasdaq even tested the all-time high reached early June. The likes of the S&P 500 and EuroStoxx50 recovered up to 1.5%. Positive risk vibes and lower energy prices supported consolidation on bond markets following the past month’s heavy losses. European yield curves bull steepened.
BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.