U.S. military forces have conducted airstrikes on military targets on Iran's Kharg Island. The U.S. President issued a stern warning, stating that if Iran obstructs ship passage through the Strait of Hormuz, the U.S. will strike its oil infrastructure. He also called on countries including China, the UK, France, Japan, and South Korea to deploy naval vessels to help secure the waterway.
Iran has explicitly stated that the Strait of Hormuz will only be closed to "enemies and countries supporting their aggressive actions," and that vessels from neutral nations may pass with coordinated permission.
The international community is highly attentive to these developments. The British Prime Minister called for the international community to "swiftly resolve" the related military conflict, emphasizing the need to quickly restore freedom of navigation in the Strait of Hormuz.
The UK is collaborating with European allies to formulate a long-term collective plan to ensure regional navigation security and mitigate impacts on the global economy. Unmanned vessels with mine identification and destruction capabilities have already been deployed in the relevant area, while the possibility of providing anti-drone technical support is also being explored. However, the Prime Minister also acknowledged that unmanned mine-clearing technology has not yet been fully proven, and a final decision remains pending.
A narrative of falling oil prices is emerging, leading to weakness in the crude market. The easing of concerns over oil prices is expected to directly trigger a correction in the global crude market and related commodities that had risen in price.
From a long-term perspective, a 13-page report points out that Iran-related geopolitical risks have artificially inflated oil prices for decades, currently adding a premium of $5 to $15 per barrel. If the threat posed by Iran to regional energy infrastructure and shipping routes can be diminished, oil prices could return to equilibrium levels, potentially falling significantly below $60 per barrel.
However, an analyst at ING noted that markets are repricing for a potential prolonged disruption of oil transit through the Strait of Hormuz. Given limited spare capacity, a lagged supply response from the U.S., and constrained alternative routes, oil prices are expected to move higher under a baseline scenario.
A revised scenario predicts that if energy transport is almost completely halted before the end of May, with a gradual recovery from June to August, oil prices would reach new historical highs. Prices would likely need to remain elevated to rebalance the market by suppressing demand.
Persistently high oil prices are fueling inflation risks. Rising energy costs are expected to be passed through to consumers, increasing stagflation risks and potentially forcing major global central banks to recalibrate their monetary policy frameworks.
Gold is holding key support levels, driven by both safe-haven demand and inflation logic. Amid geopolitical tensions and concerns about falling inflation, gold, as a traditional safe-haven asset, is showing strength. Spot gold (XAU/USD) is consolidating near the key psychological level of $5,000.
A pullback in the U.S. dollar and U.S. Treasury yields from recent highs has provided some support for the gold price.
The market's core focus this week is on the U.S. Federal Reserve's interest rate decision and the policy direction of other major global central banks. The Fed is highly likely to keep its benchmark rate unchanged within the 3.50%-3.75% range. Investors will closely watch the forward guidance from the Fed Chair, as well as signals from the updated Summary of Economic Projections (SEP) and the dot plot regarding the future path of interest rates.
Data from the CME FedWatch Tool shows a significant cooling in investor expectations for Fed rate cuts. The probability of a 25-basis-point cut in June has plummeted to 23.6% from 51.2% a month ago. Market pricing now suggests only one rate cut by the end of the year, a clear adjustment from previous expectations for two cuts.
Aside from the Fed, the Bank of England, European Central Bank, Bank of Japan, and Bank of Canada are all expected to maintain their current policies, while the Reserve Bank of Australia might implement another rate hike.
As a core anchor for hedging against geopolitical uncertainty, gold's allocation value remains prominent. It is expected to maintain high volatility in the short term. From a medium-term perspective, as long as there are no clear signals of de-escalation in the Middle East conflict, gold's safe-haven appeal is likely to persist.
The linkage logic between crude oil and gold: Inflation transmission and safe-haven resonance. International crude oil and gold prices are currently showing a significant inverse correlation, with the core link being the inflation transmission mechanism and the resonance effect of geopolitical risk.
Gold has inherent properties as a hedge against geopolitical risk but is sensitive to real interest rates. International crude oil prices are closely tied to global inflation levels. Rising oil prices can quickly push up market inflation expectations, thereby influencing real interest rates and subsequently impacting gold's price trajectory.
In the current U.S.-Iran conflict, disruptions to shipping in the Strait of Hormuz simultaneously impact oil supply and market risk appetite, creating a transmission chain: rising crude prices → rising inflation expectations → higher real interest rates → weaker gold.
Summary and Technical Analysis: From a market logic perspective, fluctuations in oil prices indirectly affect the gold market by influencing inflation expectations, while geopolitical risk acts as a common catalyst for simultaneous strength in both assets.
Under the current situation, if the conflict escalates further, leading to a prolonged blockade of the Strait of Hormuz, oil prices could surge by 50% to 100%, potentially triggering a scenario reminiscent of historical oil crises. Gold would be pulled in two directions by safe-haven demand and rising real rates, leading to complex price action.
If the geopolitical premium in oil prices dissipates, gold could revert to a fluctuation logic dominated by real interest rates and potentially stage a rebound.
The correlation between the two assets not only reflects current global market risk appetite but also reveals the profound impact of geopolitical conflicts on major asset allocation, serving as a key clue for investors to grasp market trends.
Technical Perspective: Spot gold has touched the lower boundary of its rising channel and begun to rebound. WTI crude oil futures are continuously testing the 0.618 Fibonacci retracement level.
As of 21:45 Beijing Time, spot gold is quoted at $5,032 per ounce, while WTI crude oil futures are quoted at $94.66 per barrel.
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