Gold continues to surge, fueled by its status as a safe haven in the face of global uncertainty.
Amid escalating friction between the world’s two predominant power blocs, gold prices have surged to unprecedented levels, underscoring the metal’s role as a premier hedging instrument. Over the past 16 months, the allure of gold as a hedge has intensified in step with its climbing price, mirroring the geopolitical tensions.
Spot gold prices exceeded previous records set in December, hitting new highs on March 6 and 7. By March 11, gold’s value ascended further, reaching a historic peak, surpassing $2,180 per ounce.
The rally, which began in October 2022, has seen gold prices soar by approximately 30 percent, fueled by its established status as a safe-haven asset amidst global uncertainty.
Data from the World Gold Council indicates that gold demand in 2023 escalated to a record-breaking 4,899 metric tons, a testament to its enduring appeal.
Gold’s scarcity, as a non-renewable resource with limited reserves and constrained annual production, coupled with the growing challenges of mining, further cements its intrinsic value. The precious metal is historically seen as a hedge against geopolitical tensions and inflation.
Geopolitical Conflicts Intensify Amid Economic, Strategic Stakes
The landscape of global geopolitics is currently marked by four major conflicts, each contributing to heightened economic uncertainty and inflationary pressures. Two conflicts are actively unfolding, with the scope of escalation still uncertain, while two others see tensions rapidly escalating.
The ongoing Russia–Ukraine conflict, now in a stalemate after two years, faces a critical juncture as the Biden administration’s funding for Ukraine encounters significant opposition from the Republican-majority House of Representatives in the United States. The pushback raises questions about potential military support for Ukraine from EU countries.
French President Emmanuel Macron has emphasized the necessity of taking all measures to prevent a Russian victory. Echoing this sentiment, Slovak Prime Minister Robert Fico, during a press conference in Paris on Feb. 26, mentioned that several NATO and EU member states are contemplating the deployment of troops to Ukraine on a bilateral basis.
The Kremlin issued a stark warning the next day that direct NATO intervention would lead to inevitable conflict between Russia and the alliance.
By Shawn Lin and Sean Tseng
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