On April 8, international gold prices surged strongly, breaking through the $4,800 per ounce mark. By 5:00 p.m. that day, the main New York gold futures contract was trading at $4,822 per ounce, having climbed as high as $4,888 during the session, marking an increase of over 4% compared to the previous trading day.
Since the outbreak of conflict in the Middle East, gold prices have experienced a roller-coaster ride. In the early stages of the conflict, safe-haven demand pushed prices above $5,400 per ounce. However, influenced by factors such as oil price fluctuations, gold prices subsequently retreated sharply, erasing all gains for the year. Recently, with the announcement of ceasefire talks between the U.S. and Iran, gold prices have rebounded once again.
According to analysis, the short-term rally in gold prices is essentially a corrective rebound following earlier oversold conditions, occurring against the backdrop of the U.S. and Iran announcing a ceasefire and initiating two weeks of negotiations. At the same time, factors such as the potential reopening of the Strait of Hormuz and a sharp decline in international oil prices have also fueled market expectations for interest rate cuts. The combination of this corrective rebound and renewed expectations for rate cuts has driven gold prices higher.
Additionally, it was noted that the People's Bank of China purchased nearly 5 tonnes of gold in March, a significant increase compared to the average monthly purchases in the fourth quarter of last year. This has further strengthened the supportive effect of central bank gold buying on prices.
In the short term, factors such as the progress of U.S.-Iran negotiations and CPI data will continue to influence gold price trends. Analysis suggests that if the U.S.-Iran talks break down, gold prices will face downward pressure. On one hand, an escalation of conflict could exacerbate inflation, leading markets to adjust their expectations for Federal Reserve rate cuts, which would weigh on gold prices. On the other hand, conflict could also strengthen the U.S. dollar's safe-haven appeal, diverting funds from gold to the dollar and causing prices to retreat after an initial spike. Conversely, if negotiations proceed smoothly and tensions ease, gold prices are expected to rebound.
Further attention was drawn to the upcoming U.S. March CPI data and the Federal Reserve's interest rate decision, noting that the outcomes of these two events will also impact gold prices.
Regarding investment strategy, it was suggested that, amid geopolitical uncertainty, a range-trading strategy focusing on buying low and selling high could be adopted. Investors were also advised to monitor the developments in the U.S.-Iran negotiations closely, emphasizing the need to avoid the risk of a pullback once safe-haven sentiment subsides, while remaining vigilant about a potential reversal in interest rate logic should inflation expectations intensify.
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