With geopolitical risks growing in the Middle East, creating a “risk-off” environment that is supportive to gold prices, economists at Nomura caution investors to not underestimate the role Yemen could have on the region’s stability. In late January, the Japan-based bank warned of the deteriorating situation in the country and the risks this poses. “Wider strategic importance of Yemen should not be underestimated, especially with its geographical situation at the mouth of the Red Sea,” the bank says. “Our economist believes the situation further compounds the complexities of the troubled region and merits a continued watchful eye owing to the additional threat to wider stability. Indeed, this development may have implications for the ongoing P5+1 nuclear negotiations, for which we assign a higher than 50% probability to an agreement being reached, including political agreement by 31 March.”
