Impact of global tensions on commodity futures from a geopolitical risk perspective

Against the backdrop of escalating geopolitical frictions from cross-border trade disputes to regional conflicts, global commodity supply chains and price stability have been increasingly disrupted, creating an urgent need to clarify how global tensions influence commodity futures. This study investigates the impact of global tensions on commodity futures, employing the Global Geopolitical Risk (GGPR) index and US‒China Tension (UCT) index as proxies for tension levels. Gold, wheat, and crude oil futures are selected as the core research subjects, with their responses to these tension indices analyzed via asymmetric Granger causality tests and quantile Granger causality tests. These two approaches can not only capture non-linear relationships, but also reveal how impacts vary across different market conditions. Key findings indicate that both the GGPR and UCT indices exert significant asymmetric effects on commodity futures. Moreover, the magnitude and direction of these impacts exhibit notable heterogeneity across the three commodities, driven by their distinct attributes. These results provide valuable empirical evidence, supporting investors in designing targeted asset allocation strategies and assisting policymakers in formulating measures to mitigate the transmission of geopolitical risks in commodity markets.