The New Year began with quite aggressive actions by the US and by Donald Trump personally toward Venezuela, Greenland and now Iran, which has prompted investors to move away from risk and has supported demand for safe?haven assets, traditionally the US dollar and gold.

Markets are showing the classic reaction of market participants to geopolitical risk: buying the US currency and gold. But will this situation last long? That is the key question.

Fundamentally, both gold and the US dollar are arguably overpriced against the backdrop of expanding large?scale geopolitical risks. But if you look closely at the dynamics of these assets, the dollar — as seen clearly in the behavior of its ICE index — has been moving in a narrow sideways range since late spring last year. Gold, by contrast, has been rising steadily since winter 2024, driven by frenzied demand, primarily for physical bullion.

Even the crypto market has awoken after a long dormancy. Some market participants have also started buying these assets, finding defensive properties in them.

How long can this market situation persist? I believe that, given the contradictory factors both supporting and weakening the dollar — namely, geopolitics and a gloomy picture in the labor market, the real economy and inflation stabilization — the dollar will continue to trade in its current medium?term sideways range on the ICE index. The picture for gold, however, is extremely complex. Gold has been bought not only for hedging, but also because of a changing world and the erosion of the dollar's hegemony in global settlements. All indications point to this last reason as the primary driver, since speculative buying at highs has traditionally been negligible. Countries, facing changing circumstances, are prepared to spend on gold purchases for more serious strategic reasons.

Market outlook for the day

#NDX

The CFD on the NASDAQ?100 futures is trading above 25,811.00. Demand for US tech stocks and the prospect of lower interest rates support the contract, which could first rise to 25,858.00 and then to 26,211.00. A buy trigger level could be 25,706.30.

Bitcoin

The crypto is receiving support as a safe?haven asset, which could push it up toward $100,000.00. A buy trigger level could be $97,913.75.