The Chairman of the Federal Reserve, Jerome Powell, has acknowledged that the $39 trillion national debt is "not unsustainable," but warned that if action is not taken soon, the current trajectory "will not end well." With the current Federal Reserve interest rate between 4% and 5%, future interest costs could potentially reach 5.5% of U.S. GDP, making debt servicing a significant constraint on the federal budget. If this risk continues to escalate, market focus on the issue is expected to intensify, underscoring the importance of a diversified investment strategy.

In recent years, gold's appeal as both a safe-haven and monetary asset has grown. The market has reassessed the potential direction of the conflict in the Strait of Hormuz. Today, the international gold price has climbed back above $4800 per ounce, reflecting market optimism. However, whether this marks a re-establishment of the uptrend in international gold prices still requires observation.

Compared to the international gold price, the significant rise in the international silver price—a common characteristic of increases in risk-on precious metals—suggests that investors are not merely seeking safety. Instead, they are actively increasing their exposure within a complex market to pursue further gains.

Giovanni Stanovo, a commodities analyst at UBS Group, stated that commodities like gold and oil could potentially see substantial price increases even after the conclusion of the Middle East conflict. However, investors holding significant gold positions should also consider broadening their investment portfolios to include other commodities.

Although geopolitical risk premiums may gradually fade, the fundamental supply and demand dynamics for commodities remain supportive. Future supply shortages for copper and aluminum are still possible. For investors dedicated to gold, a moderate allocation can enhance portfolio diversification and help hedge against systemic risks. For investors already heavily invested in gold with substantial unrealized gains, UBS recommends expanding the commodity investment scope to include assets like copper, aluminum, and agricultural products, aiming to further diversify future sources of return.

UBS maintains its conviction that the international gold price could potentially rise to $5900-$6200 per ounce this year. Gold primarily serves as a hedge against the broad repercussions of conflicts, offering protection against risks such as currency devaluation, increasing fiscal deficits, and a global economic slowdown triggered by geopolitical tensions.

Despite near-term concerns over inflationary risks from rising global energy prices and potential interest rate hikes by the Federal Reserve—factors typically unfavorable for gold—UBS believes the probability of further rate increases is low. Conversely, the longer the Middle East conflict persists, the greater the risk of negative economic spillovers, which would likely increase demand for gold as a store of value.

The underlying demand for gold remains robust, and structural trends are expected to continue enhancing its appeal. Trends such as rising government debt levels and diversification efforts by central banks and global investors to reduce reliance on the U.S. dollar are anticipated to support the long-term prospects for the international gold price. UBS remains optimistic about the international gold price and believes gold continues to be an effective tool for portfolio diversification.