COMEX gold extended its decline, with prices approaching the $4,600 per ounce level during the session. Trading activity remained generally cautious ahead of the holiday period.
On the geopolitical front, the United Arab Emirates announced on April 28 that it will formally withdraw from OPEC and the "OPEC+" mechanism starting May 1, with plans to gradually increase oil production. Following the announcement, international oil prices experienced a brief dip before stabilizing and recovering, indicating a relatively muted market reaction. In the short term, due to the continued blockade of the Strait of Hormuz, the UAE faces physical obstacles in converting additional production capacity into increased exports, limiting the practical impact of its output expansion on near-term oil prices.
Regarding U.S.-Iran negotiations, Iranian Foreign Minister Araghchi recently presented ceasefire conditions to the U.S. side, including the establishment of a new legal framework in the Strait of Hormuz, compensation guarantees, assurances against further military aggression, and the lifting of maritime blockades. The U.S. expressed dissatisfaction with Iran's proposal to reopen the strait before resolving nuclear issues, arguing that doing so would weaken a key bargaining chip. The two sides maintain significantly divergent positions.
On the macroeconomic front, the U.S. Federal Reserve will hold its April policy meeting this week. Market expectations suggest the Fed will likely keep interest rates unchanged, with attention shifting to the wording of the post-meeting statement and the tone of Chair Powell's final press conference during his term. Rising oil prices and growing inflation expectations have further reduced market expectations for interest rate cuts within the year. With Powell preparing to step down and his potential successor, Waller, recently signaling a hawkish stance during hearings, uncertainty around future policy direction has increased.
Gold's recent weakness stems primarily from geopolitical tensions driving up oil prices, which in turn fuels inflation expectations and reinforces anticipations of tighter monetary policy. However, from a medium to long-term perspective, geopolitical risks themselves and inflation expectations fueled by high oil prices continue to provide underlying support for gold. As the Labor Day holiday approaches, domestic markets will face three trading days of exposure to international market fluctuations. Investors are advised to manage positions carefully, maintain light exposure during the holiday, and await clearer market trends before making significant moves after the break.
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