According to Wang Xiang, fund manager of the gold ETF at Boshi Fund, last week (March 30 to April 3) saw twists in Middle East tensions, a slight easing of liquidity-driven gold selling, coupled with a minor adjustment in the U.S. dollar index, creating a window for gold to rebound. However, no clear signs of capital returning were observed in overseas fund flows, possibly still related to high volatility.
In terms of market views, after four consecutive weeks of adjustment, the gold market finally found a rebound opportunity last week. This was driven by market expectations that the U.S. and Iran might reach a ceasefire agreement, boosting risk appetite and repairing the concentrated selling caused by short-term liquidity needs. However, Trump's televised address dashed these hopes for de-escalation, causing gold to fall back into volatility.
The market is currently caught between expectations of prolonged Middle East conflict and potential concessions from the Trump administration's TACO policy. The gap in ceasefire conditions between the U.S. and Iran remains wide, with no clear path to de-escalation, and risks of further conflict escalation persist, including scenarios such as U.S. ground intervention in Iran. Against this backdrop, oil and the U.S. dollar show stronger upward certainty, while gold may be weighed down by risk asset corrections and short-term selling by central banks aiming to stabilize markets. In the short term, gold may remain under pressure.
However, from a medium-term perspective, gold could stabilize and recover. The negative impact of rising oil prices on the market has its limits. If the conflict drags on, the market's focus may shift from inflation shocks to concerns about slowing economic growth. At that point, even with high oil prices and a weaker U.S. stock market, U.S. Treasuries and gold could see gains. The market has not yet fully transitioned to this pricing stage.
In last week's market developments, U.S. non-farm payroll data for March exceeded expectations. The U.S. added 178,000 jobs in March, while February's data was significantly revised down to a loss of 133,000 jobs. The unemployment rate dropped from 4.4% to 4.3%, and the labor force participation rate dipped slightly to 61.9%. Meanwhile, the year-on-year growth in average hourly earnings fell from 3.8% to 3.5%, indicating some easing of wage pressures.
The Central Bank of Turkey continued to reduce its gold holdings. As the Iran conflict continues to impact global markets and drive up energy prices, the Turkish central bank is using its gold reserves at an unprecedented rate to stabilize its financial system. The bank's gold reserves fell by 69.1 tons last week to 702.5 tons, marking the largest weekly decline since at least 2013 when records began. Over the past two weeks, the cumulative decline has exceeded 118 tons, highlighting the severe challenges Turkey faces under exchange rate and liquidity pressures.
(Risk reminder: Recent gold volatility has been high. Investing in gold funds requires a full understanding of risks, and decisions should be made prudently based on individual risk tolerance. It is also advisable to continuously monitor global macroeconomic trends, central bank gold purchases, geopolitical developments, and related dynamics.)
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