Geopolitical tensions resurface, is the appeal of safe-haven assets on the rise?
Analysts predict that the increase in geopolitical risks may prompt investors to turn to safe-haven assets such as gold, the US dollar, and US Treasury bonds.
Recently, a large-scale conflict broke out between Israel and Palestinian armed groups, and international investors are closely watching this geopolitical event. Analysts predict that the rise in geopolitical risks may prompt investors to turn to safe-haven assets such as gold, the US dollar, and US Treasury bonds.
Peter Cardillo, Chief Market Economist at Sparta Capital Securities, said, "This is a good example of why people need gold in their investment portfolios. It is a perfect hedge against international turmoil." He also expects the US dollar to benefit:
"As long as there is international turmoil, the US dollar will strengthen."
In recent weeks, as market expectations for higher US interest rates for a longer period of time have increased, US Treasury yields have surged, and the US dollar has continued to rise. Meanwhile, the US stock market experienced a significant decline in the third quarter but stabilized last week.
Brian Jacobsen, Chief Economist at Annex Wealth Management, commented on the situation in Israel:
"Whether this is a major market moment depends on how long this new round of Israeli-Palestinian conflict lasts and whether other countries get involved."
It is worth mentioning that Jacobsen is skeptical of the prevailing market view that "the extent of Iran's involvement will be the key factor affecting international oil prices." He believes that investors should pay more attention to Saudi Arabia's reaction compared to Iran:
"The impact of a potential production cut by Iran may be significant, but it won't be earth-shattering... The key is to see how Saudi Arabia reacts."
