Gold Shines as Geopolitical Risks Escalate
- Luciano Duque
- Oct 9, 2024
- 1 min read
In recent years, geopolitical risks have surged, triggering significant market reactions. The geopolitical landscape has become more volatile, with spikes in risks often leading to selloffs in equity markets. Amid this turmoil, gold has consistently proven to be a reliable safe-haven asset, offering strong returns during periods of crisis.
Recent events, such as the Ukraine-Russia conflict, escalating tensions in the Middle East, and attacks across borders, have amplified geopolitical concerns in 2024. The Geopolitical Risk Index (GPR) recorded 15 spikes this year alone, reflecting a heightened risk environment that has negatively impacted global equities. However, gold prices have surged in response, showing an average weekly return of 1.6% during geopolitical risk spikes, compared to global equity declines of 0.8%.
Institutional investors and central banks are increasingly turning to gold as a hedge against geopolitical uncertainty. In 2024, gold outperformed major asset classes, rising by 28% as geopolitical risks intensified. This trend is expected to continue, with gold offering a robust defense against unpredictable global events.
For investors seeking a resilient portfolio, gold remains a key asset, thanks to its safe-haven nature, long-term return potential, and low correlation with other risk assets. In an uncertain world, gold is proving to be a critical hedge against geopolitical shocks.
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