UBS believes that the recent market responses to the Middle East crisis are overstated. They argue the geopolitical risk premium is too high when compared to the actual threats, especially since Iran only contributes 1.6% to global oil production. UBS compares this situation to past conflicts that caused real supply issues. They feel the current geopolitical tensions will not have lasting effects on the market and view any market drops as chances to buy. UBS has a positive view of global stocks, particularly in the defense and technology sectors. They expect gold prices to rise to $3,500 per ounce by the end of 2025, driven by growing demand for strategic assets and protection against inflation. UBS thinks the current geopolitical worries are excessive. They anticipate that markets will stay stable, supported by good policies, strong wages, and improvements in AI productivity. In summary, UBS believes that the market reactions to events in the Middle East do not match the actual risks involved. They argue that while the region gets a lot of political attention, the effect on global energy supply is limited, especially with Iran’s small role in oil production. By comparing this to past geopolitical incidents that did disrupt oil supply, UBS suggests current fears are being overvalued. They see market dips not as reasons to panic, but as opportunities to buy back in, especially where growth fundamentals are strong. UBS feels optimistic about sectors like defense and technology, where demand is driven by global security changes and ongoing innovation. They also have a strong outlook for gold, seeing it as a financial stabilizer amid uncertainty and inflation. This perspective shifts how we should view short-term market fluctuations—whether to consider them as mere noise or real issues. If we expect supportive policies from major economies and strong consumer spending, then sharp market reactions tied only to geopolitical news may seem out of step with the overall economic situation. More specifically, if asset prices start reflecting worst-case scenarios without any drop in earnings or credit conditions, it may be time to reassess our risk levels to find better buying opportunities. The potential for AI to improve productivity further supports the idea of steady growth. Instead of reacting to every narrative change, it’s wise to focus on assets that have been broadly affected but still have strong long-term fundamentals. This could be particularly true for investments sensitive to commodity price changes or inflation expectations, especially when current valuations are lower than historical averages. As gold sees new investments and risk premiums decrease, the technical pressures on derivatives might ease, especially for those sensitive to market downturns. While timing is important, the current mix of data and fundamentals suggests stabilization, not escalation, for the foreseeable future.

here to set up a live account on VT Markets now