Intensifying US-Iran tensions and the blockade of the Strait of Hormuz are driving up oil prices, rapidly increasing stagflation expectations, while gold faces temporary pressure. A review of the two oil crises in the 20th century shows that gold typically experienced brief declines due to liquidity shocks early in the crises, but subsequently reached new record highs driven by stagflation dynamics, displaying a classic pattern of initial decline followed by sustained gains. The medium to long-term window for gold allocation is quietly opening.
High-intensity US-Iran conflict continues to escalate, disrupting global energy transit routes and fueling stagflation trades, leading to significant divergence across major asset classes. The conflict, which began on February 28, 2026, has persisted for over a month. Measured by the Geopolitical Behavior Index, its intensity has surpassed that of the Russia-Ukraine conflict. The effective blockade of the Strait of Hormuz has severely impacted global energy supply channels. Against this backdrop of rising oil prices due to geopolitical risks and quickly mounting stagflation fears, combined with liquidity tightening effects, global equity markets have broadly retreated. Commodities show clear divergence: crude oil oscillates at high levels, while assets like gold and copper experience phase-specific pressure.
Historical analysis reveals that during oil crises, gold often initially faces pressure from liquidity shocks before repeatedly achieving new highs propelled by stagflation logic. Examining the historical context of the two 20th-century oil crises, gold demonstrated outstanding returns in macroeconomic environments characterized by rising inflation trends and a declining US output gap. In the early stages of these crises, market liquidity tightening and rapidly falling risk appetite frequently led to temporary corrections in gold prices. As stagflation characteristics gradually became apparent, gold's safe-haven and inflation-hedging attributes strengthened consistently. After brief consolidation periods, prices broke through previous highs and entered sustained upward trends, overall exhibiting the typical "first suppress, then lift" pattern.
Short-term negative factors appear relatively well-priced, while the medium to long-term upward logic for gold remains intact, suggesting a potential return to a fluctuating upward trajectory. Market-implied probability for a Federal Reserve rate hike in March 2027 now approaches 30%, indicating that hike expectations are largely priced in, while rate cut expectations have diminished substantially. Furthermore, given the US's K-shaped recovery structure, a rate hike could negatively impact interest-rate-sensitive sectors like AI, making it highly probable the Fed maintains current rates medium-term. Short-term headwinds may be nearing exhaustion.
The combination of a potential stagflation cycle and upwardly revised inflation expectations suggests gold prices may revert to their primary drivers. Utilizing the Pring Cycle analytical framework from a previous report comparing gold and US equities, gold exhibits significant outperformance characteristics during economic stagflation phases. Comparing Bloomberg consensus forecast data from late 2025 to April 2026 reveals that inflation expectations have been substantially revised upward, indicating the market may already be pricing in inflation-trade logic. Subsequently, gold prices are expected to realign with their core drivers.
Short-term disturbances are unlikely to alter gold's long-term trajectory; post-adjustment, its allocation value becomes clearer. A systematic review indicates the recent phase of gold price correction was primarily driven by temporary liquidity shocks and shifting expectations regarding Fed monetary policy. In the short term: 1) Historical oil crisis precedents show liquidity tightening during initial conflict phases often causes brief gold pressure; the current correction may already be sufficient. 2) Current market hike expectations are largely reflected in gold prices, and combined with weak US recovery and tech sector sensitivity to rates, the probability of a mid-term Fed hike is limited, with maintaining the target rate being the most likely outcome.
From a medium to long-term perspective, gold and related sectors are entering a favorable allocation window. 1) Upward revisions to inflation expectations and the ongoing stagflation trade narrative keep the long-term bullish case for gold intact. 2) The challenges of expanding US debt规模和 fiscal imbalances are unlikely to be fundamentally resolved soon, leading to marginal weakening of US dollar credibility. This is expected to prompt continued gold accumulation by global central banks, providing medium to long-term support for gold prices. The current adjustment is viewed as creating a relatively favorable entry point, with the strategic allocation window gradually opening.
The US-Iran conflict has escalated into a high-intensity geopolitical event and is amplifying stagflation trades via the energy channel. Lasting over a month since its outbreak on February 28, 2026, the conflict's intensity, measured by the Global Geopolitical Behavior Index, significantly exceeds that of the Russia-Ukraine conflict. The Strait of Hormuz, a critical global energy chokepoint and a key Iranian geopolitical bargaining chip, remains a pivotal variable disturbing global financial markets. Persistently elevated geopolitical risks have pushed international oil prices higher with volatile trading, significantly intensifying concerns about rising inflation and constrained economic growth. Stagflation expectations have risen swiftly, and related trading logic continues to play out across global equity, bond, currency, and commodity markets.
The ongoing blockade situation at the Strait of Hormuz, with severely restricted vessel traffic as of April 4, 2026, continues to disrupt global energy trade routes, causing broad market impacts. Under the combined influence of tightening market liquidity and stagflation trade dynamics, global equity markets have seen notable pullbacks. Within commodities, Brent crude oil maintains its high-level volatility, while assets like gold and industrial metal copper face significant pressure.
From the perspective of the Pring Cycle asset allocation framework, rising stagflation expectations highlight gold's value. The US-Iran conflict's upward pressure on oil prices may push the global economy toward a stagflationary cycle. Historical patterns suggest gold could become a core asset with high allocation value during such a phase. Observing through the Pring economic cycle framework, sustained oil price increases from US-Iran geopolitical tensions could create a macro mix of constrained economic growth, rising inflation trends, and marginally tighter monetary policy, increasing the likelihood of the global economy entering a stagflation period. Historical asset performance indicates that if the global economy enters a stagflationary phase, gold's inflation-hedging and safe-haven properties are likely to become increasingly evident, potentially offering superior relative value among major asset classes.
Historical review confirms that short-term pressure on gold does not negate its upward trajectory. Analyzing the two 20th-century oil crises shows gold performed notably well during periods of rising inflation and a declining US output gap. Notably, in the initial stages of both crises, temporary liquidity squeezes and rapidly contracting risk appetite caused short-term price corrections in gold. However, as the hallmarks of stagflation—persistently high inflation and slowing economic growth—became clearer, gold's dual attributes strengthened. After brief adjustments, prices broke previous highs and set new records, demonstrating the characteristic 'first suppress, then lift' pattern.
Looking ahead, gold prices are expected to follow a fluctuating upward path. Since the escalation of the US-Iran conflict, gold has undergone a phase of adjustment, but the core long-term bullish thesis remains fundamentally unchanged. The recent short-term pressure stemmed mainly from heightened expectations of a shift in Fed monetary policy and capital reallocation due to temporary liquidity tightening. From a policy expectation standpoint, the probability of the Fed restarting rate hikes in the medium-short term is low. Data from the FedWatch tool on April 4, 2026, shows market-implied probability for a March 2027 hike near 30%, suggesting hike expectations are reasonably well-priced into current gold prices, implying short-term negatives may be largely exhausted. Additionally, the US post-global health event economy exhibits a pronounced K-shaped recovery, with social and capital resources continuously shifting from traditional manufacturing towards high-end tech sectors. The marginal contribution of AI-related investment to growth is increasing, with its share in GDP rising steadily. A Fed rate hike in this context would significantly raise financing costs, potentially substantially impacting the interest-rate-sensitive AI sector. Overall, gold prices are anticipated to gradually revert to being driven by fundamentals.
Rising inflation expectations fueled by the US-Iran conflict, combined with a weak US economic recovery, create a macro environment favorable for gold. Comparing Bloomberg consensus forecast data from late 2025 to April 2026 reveals that, influenced by escalating US-Iran tensions and increased energy supply disruptions, market predictions for US inflation indicators have been significantly revised upward. Concurrently, the US economic recovery momentum remains weak, with growth expectations moderating. In this macro environment of elevated inflation trends intertwined with weak economic recovery, real interest rates face downward pressure, further highlighting gold's inflation-hedging qualities and safe-haven allocation value, continuously strengthening its relative attractiveness among major asset classes.
Comments