The precious metals market saw a significant decline overnight, with spot gold in London falling 1.95% and SHFE gold dropping 2.25%.
The ongoing conflict in the Middle East continues to push oil prices higher, while the US dollar index rose 0.32%, marking its largest single-day gain in nearly a month. Additionally, the 10-year Treasury yield climbed to its highest level in over a year. These factors have renewed market concerns about potential interest rate hikes, keeping gold in a weak and volatile state.
According to reports from foreign media yesterday, the US President told US media that he is "getting close" to a decision on whether to launch a "massive attack" against Iran, which could be larger in scale than the military action taken against Iran at the end of February. US officials stressed that no final decision has been made yet, but the US military is prepared. Separately, as temporary global tariffs expire, the White House has introduced a new tariff system under Section 301, imposing tariffs of 10% to 12.5% on goods from dozens of countries and regions. This system, effective July 24th, replaces the expiring global import tariffs and covers 99.4% of US trade. With the US and Iran once again on the brink of a full-scale conflict, risk aversion has surged rapidly. The US dollar index and crude oil prices have climbed sharply, while gold prices have weakened considerably.
In the short term, it is advisable to adopt a defensive strategy to navigate this highly volatile environment. However, attention should also be paid to whether the US President's final decision will lead to another "TACO" (Tactical Accommodation, Compromise, and Override) scenario, a pattern observed in previous geopolitical tensions where a threat of major action is followed by a de-escalation.
Comments