Global geopolitical tensions are the primary driver of marke...

Global geopolitical tensions are the primary driver of market sentiment. Heightened instability in the Strait of Hormuz is creating significant risk-off behavior, fueling speculation of further US Federal Reserve rate hikes and strengthening the US dollar. This environment has triggered a classic flight to safety, with gold experiencing a notable jump in price. The market remains extremely sensitive to international headlines, particularly concerning Hormuz and US economic data, which are creating significant volatility in currency and commodity markets. The domestic landscape is dominated by the severe depreciation of the Indonesian Rupiah, which has breached a historic low of Rp 17,897 against the dollar. This currency weakness is negatively impacting the broader economy, with Q2 growth now projected to fall below 5%. Consequently, we are witnessing a powerful surge in local demand for physical gold as a wealth preservation tool. This is not just anecdotal; major market players like Hartadinata Abadi are reporting profit surges of over 101%, explicitly citing soaring consumer demand for bullion as the key factor. Our outlook remains bullish for gold. The twin pressures of international geopolitical risk and severe domestic currency devaluation create a powerful case for holding gold as a core portfolio hedge. We anticipate the Rupiah will remain under significant pressure as long as the Hormuz situation persists, sustaining the strong local demand for bullion. Refinery operations are running at near-peak capacity to meet this demand. We advise clients to maintain or increase their gold allocation, as it offers crucial protection against both external shocks and internal economic fragility.