By Bas Kooijman, CEO and Asset Manager of DHF Capital S.A
Gold advanced on Wednesday, edging toward new highs as escalating geopolitical risks reinforced demand for safe-haven assets. Tensions in the Middle East continue to drive demand for gold. Attention could remain on the developments around Iran as well as other areas in the region, in addition to potential actions from the US. Similarly, tensions in Eastern Europe remain unresolved, keeping geopolitical risk premia elevated. In Latin America, uncertainty over the developments around Venezuela continues to support gold as Washington moves to expand efforts to seize vessels linked to Venezuelan oil exports. These actions may further weigh on global risk sentiment, painting a supportive scenario for the precious metal.
At the same time, ongoing frictions between the Trump administration and Fed Chair Jerome Powell could remain a source of concern and could fuel demand for gold and other safe-haven assets. Markets could continue to hedge against the risk of financial instability. Changes in monetary policy expectations could also affect gold’s performance. While the anticipation of two rate cuts this year is expected to support gold, new data like the PPI release today could affect forecasts and could fuel some volatility.