Last week (March 30 to April 3), fluctuations in the Middle East situation, a slight easing in gold liquidity selling, combined with a minor adjustment in the U.S. dollar index, provided 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.
From a market perspective, after four consecutive weeks of adjustment, the gold market finally saw a rebound opportunity last week. The rebound was initially 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 demands. However, Trump's televised address dashed these hopes for de-escalation, causing gold to fall back into fluctuation.
The market is currently caught between expectations of a prolonged Middle East conflict and anticipation of concessions from the Trump administration's TACO policy. The conditions for a ceasefire between the U.S. and Iran differ significantly, with no clear path for conflict resolution yet, and risks of further escalation remain, including potential U.S. ground intervention in Iran. Against this backdrop, oil and the U.S. dollar have higher upward certainty, while gold may be weighed down by risk asset adjustments 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 prolongs, 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. bonds and gold could see an upward trend. The market has not yet fully transitioned to this pricing stage.
In terms of last week's market dynamics, 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 slightly declined to 61.9%. Meanwhile, the year-on-year growth rate of 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 push up energy prices, the Turkish central bank is using its gold reserves at an unprecedented rate to stabilize its financial system. Last week, the bank's gold reserves decreased by 69.1 tons to 702.5 tons, marking the largest weekly decline since at least 2013. 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 significant. Investing in gold funds requires a full understanding of risks, and decisions should be made prudently based on individual risk tolerance. Continuously monitor global macroeconomic trends, central bank gold purchases, geopolitical developments, and related dynamics.)
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