"Venezuela Airstrike Strengthens Gold Price Momentum Over Oil"

Sangsangin Securities: "Lingering Uncertainty Stimulates Preference for Safe Assets"

On January 6, Sangsangin Securities analyzed that "the key variable in the commodity market resulting from the U.S. attack on Venezuela is the price of gold, rather than oil prices." Accordingly, the firm advised that expanding the proportion of gold investments would be a rational commodity market investment strategy for this year.

Choi Yechan, a researcher at Sangsangin Securities, stated in a report titled "Venezuela Attack: Focus on Gold Rather Than Oil" that "the remaining uncertainties, such as the possibility of a second U.S. attack and China's response, will stimulate a preference for safe assets in the medium to long term."

Choi assessed that the impact of rising oil prices following the U.S. attack on Venezuela on January 3 (local time) would be limited. He explained, "Although Venezuela is a major oil-producing country with the world's largest oil reserves, oil prices actually declined slightly immediately after the attack. This reflects the market's view that the U.S. military action was aimed at regime change rather than controlling oil exports, and that there is potential for increased supply through U.S.-led reconstruction of the oil industry in the future."

He also pointed out that the ongoing production increase policy by OPEC Plus, a major oil-producing consortium, and the absence of any real supply disruptions mean that a reversal in the downward trend of oil prices is unlikely. Accordingly, the report maintained its average oil price forecast for this year at 58 dollars per barrel.

In contrast, gold was evaluated as a representative beneficiary asset amid heightened geopolitical uncertainty. The report explained that the U.S. government is hinting at the possibility of a second military action, and concerns that China could consider military options such as invading Taiwan in response to the Venezuela situation are dampening market sentiment.

Choi emphasized, "Such uncertainty will increase the preference for safe assets and serve as a driver for higher gold prices." He added that in past cases, such as the Iraq War in 2003, when war caused disruptions in oil supply, gold prices rose much more sharply than oil prices. At that time, oil prices rose only 6.1% over 90 days, while gold prices increased by 7.6% during the same period.

The report stated, "In the short term, volatility in some traditional asset classes may increase, but historically, the global stock market has delivered a solid average return of 5.5% over 90 days following U.S. military actions. Unless the war spreads globally, the negative impact on the stock market is expected to be limited."