Gold and Energy Hedges Still Key as Markets Underprice Geopolitical Inflation Risk

Equiti Group Chief Market Strategist Noureldeen Al Hammoury has warned that gold and energy hedges remain important because markets are underpricing the risk of a longer geopolitical inflation cycle. Speaking on Bloomberg's "Insight with Haslinda Amin," Al Hammoury argued that current market pricing does not fully account for the persistent inflationary pressures stemming from ongoing geopolitical tensions. This view comes as investors continue to navigate a complex environment shaped by supply chain disruptions, energy security concerns, and shifting central bank policies.

For traders in oil, gas, and energy commodities, this assessment carries direct implications. Geopolitical inflation cycles tend to boost demand for safe-haven assets like gold while also driving up energy prices due to supply risk premiums. If markets are indeed underpricing this risk, energy commodities could see further upside as the cycle unfolds. Traders may want to monitor the Brent-WTI spread and crack spreads for signs of tightening supply. For current pricing context on fuel and energy commodities, NowPrice's fuel page offers real-time data to help assess market conditions.

Looking ahead, the key question is whether geopolitical tensions will escalate or ease in the coming months. Al Hammoury's warning suggests that hedges should remain in place until there is clear evidence of de-escalation. Traders should watch for developments in major geopolitical hotspots, as well as any shifts in central bank rhetoric regarding inflation. Data releases on consumer prices and energy inventories will also be critical in confirming whether the inflation cycle is indeed prolonged as feared.