Gold in a field of tension - geopolitics support, inflation and interest rates slow down

In the short term, increased volatility is to be expected for gold, driven by geopolitical developments and uncertainties in the interest rate outlook. In the medium term, however, the environment will remain supportive, meaning that gold will continue to play an important role as a diversifier in the portfolio.

Gold remains at an elevated level, but is currently showing a significant increase in volatility. This has been triggered in particular by the escalation in the Middle East, which has led to stronger price fluctuations in the short term.

Macroeconomic tensions: geopolitics vs. interest rate prospects

A more complex macroeconomic environment is also emerging: the conflict increases the risk of rising energy prices and thus renewed inflationary pressure. This could limit or delay the scope for central banks to cut interest rates further, which would fundamentally weigh on gold. The precious metal is therefore currently caught between geopolitical support and potentially higher real interest rates.

Structural demand intact - central banks as a stabilizing factor

Structural demand remains intact, however. Central banks continue to buy gold to diversify their reserves, and demand for safe investments also increases in phases of heightened uncertainty. Supply, on the other hand, responds only to a limited extent, which can amplify price movements.

Overall, market positioning has become more dynamic without already being overheated, which means that additional movements in both directions remain possible.

Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner

_{Sources: Degussa, Reuters and Financial Times.
As at: 25.03.2025}