As the United States shakes the world through every means, including increasing pressure by imposing retaliatory tariffs on nearly every country worldwide last year, at the start of this year, U.S. President Donald Trump initiated military aggression against Venezuela, seizing a large quantity of crude oil back to the U.S.
We must also watch U.S. operations toward other countries possessing natural resources desired by the U.S., including actions against Iran and potentially Greenland and Colombia in the future. Although President Trump has softened his tone by stating he does not want war with Iran and has urged Iran to avoid attacking U.S. interests in the region, tensions between Iran and the U.S. have not diminished.
Meanwhile, the movements of other global powers—especially China, India, the European Union, and Russia—must be monitored closely, as they are directly affected by U.S. actions at this time.
"Geopolitical and political risks, as well as fears of 'war' erupting in multiple regions worldwide, have become the number one risk to the global economy currently."
At the same time, uncertainty in U.S. domestic economic policy and the pressure President Trump exerts on the independence of the U.S. Federal Reserve (Fed) continue to undermine market confidence, causing increased volatility in financial and capital markets globally. Investors worldwide are seeking 'safe havens' or investing more in safer assets.
Economic analysts state that this year will see higher volatility in global asset prices compared to last year. Beyond intensifying geopolitical tensions, investors are also closely watching the U.S. Supreme Court's ruling on the legality of President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose import tariffs, expected around June.
Additionally, the ongoing legal investigation into Jerome Powell, Chair of the U.S. Federal Reserve, and President Trump's announcement that he will name Powell's successor—whose term ends in six months—possibly next week, may clarify the direction of U.S. interest rate cuts in the near future.
Gold analysts note that global economic and political volatility has pushed gold prices this year to continuously break records. However, analysts currently view gold prices as in a consolidation phase, with some potential for slight decreases.
Overall, gold prices are expected to continue rising, both globally and domestically, though initial forecasts suggest prices may not surge as sharply as last year. Domestic gold prices are projected to range between 76,000 and 80,000 baht per baht-weight by year-end.
However, escalating geopolitical risks and conflicts among major global powers could drive gold prices—the world's safest asset—even higher than anticipated.
Similarly, regarding the Thai baht, money managers observe that each time gold prices rise, aside from foreign exchange transactions aligning with gold trades that strengthen the baht, there is additional buying pressure on the baht accompanying gold price increases. This reflects the Bank of Thailand's concern over baht volatility caused by gold trading activities.
It is expected that soon the Bank of Thailand will introduce additional measures to regulate gold trading on online platforms. It remains to be seen whether these measures will mitigate undesirable behaviors and help slow the baht's appreciation beyond the fundamentals of Thailand's economy.
In the near term, during the first half of the year, money managers agree the baht will remain highly volatile with potential for continued strengthening. Businesses involved with the baht should hedge risks to reduce potential losses. However, domestic factors could cause some baht depreciation amid uncertainties in government formation, possibly triggering capital outflows and weakening the currency.
The baht's response depends on the duration of government formation. If elections are not delayed and a government forms quickly, the baht may depreciate slightly and briefly. In the long term, money managers anticipate the baht's exchange rate to be around 32.00–33.00 baht per U.S. dollar by year-end.
Meanwhile, global oil price trends, another closely watched asset, are influenced less by the additional Venezuelan oil on the world market and more by the potential for war between the U.S. and Iran.
Interestingly, analysts note that excessive swings—either sharp rises or steep falls—in global oil prices are detrimental to Thailand. A prolonged oil price crisis would increase living costs worldwide, including for Thais. Conversely, a rapid drop in oil prices could drag down prices of agricultural products like palm oil and rubber, which are major income sources for Thai farmers.
This entire situation demonstrates the unavoidable impact of global conflicts on Thailand's economy. Moreover, several leading Thai economists worry that beyond the regions where the U.S. is currently active, ASEAN remains an area of strategic importance for the U.S. When that time comes, Thailand may be pressured to choose sides.
Therefore, beyond managing economic fallout from global turmoil, the new government should prepare strategies to maintain Thailand's neutrality between the two major economic and political blocs, aiming to maximize benefits for Thailand's economy amid increasing global pressures.
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