Geopolitical risk

Hello, this is Capital Cat. I will explain how recent geopolitical risks are affecting the gold (XAUUSD) market. Toward the latter half of October, the gold market has been unsettled by various international uncertainties. Here we look at how tensions between Israel and Iran, and developments involving North Korea and Russia, are specifically influencing gold prices.

1.Tensions between Israel and Iran and their impact on the gold market

The confrontation between Israel and Iran is increasingly viewed as a major risk factor in the gold market. In particular, as the possibility of Iran taking military countermeasures against Israel is discussed, regional oil supply is also expected to be affected. If oil prices rise, energy costs will increase and inflation is expected to accelerate. This, in turn, leads investors to choose gold as an inflation hedge, boosting demand as a safe asset.

2.Impact of North Korea-Russia collaboration

Markets are concerned that North Korea will forge a close relationship with Russia and become involved in the Ukraine situation. If this becomes a reality, international tensions could intensify due to tougher sanctions, and demand for gold as a safe asset could expand further. Depending on the response of the United States and its allies, geopolitical risk could become a factor that lifts the future gold market as well.

3.Future market trends and risk management

Analysts expect short-term adjustments in gold prices, but as long as geopolitical risks persist, they believe there is a high likelihood of a renewed upward trend in the long term. In particular, when U.S. Treasury yields are falling, gold—as a non-yield asset—tends to gain value, making it more likely for prices to rise. For these reasons, XAUUSD is expected to remain appealing to investors as a safe asset.

In summary, geopolitical risks such as the Israel-Iran confrontation and the North Korea-Russia cooperation keep the gold market bullish. While short-term corrections may occur, in the long term geopolitical risks support gold demand and further gains are anticipated.

Capital Cat