During the Asian and European trading session on Wednesday, spot gold showed signs of a slight rebound. Recently, identifying the turning point in global government bond yields has become a key focus for gold trading.
Positive signals regarding the Iran agreement from former U.S. President Trump and Vice President Vance, coupled with a significant recovery in traffic through the Strait of Hormuz, have marginally eased tensions in the global energy supply chain. This change is directly transmitted to the bond market and gold pricing through inflation expectations, forming a core clue for tracking the yield turning point.
**Traffic Dynamics: Tankers Depart, Strait Volume Doubles** Following the White House's statement, international oil prices experienced a slight decline. However, experts warn that even if a U.S.-Iran agreement is reached, oil prices are likely to remain elevated, directly determining the potential downside for bond yields and the safe-haven value of gold.
Two Chinese supertankers, stranded for over two months, have successfully navigated the strait. Data from LSEG and Kpler show that the vessels "Yuan Guiyang" and "Ocean Lily" departed carrying a combined 4 million barrels of crude oil. Concurrently, a South Korean crude oil carrier also passed through the strait. It is reported that the "Yuan Guiyang" loaded 2 million barrels of Iraqi Basra crude on February 27, and the "Ocean Lily" loaded batches of 1 million barrels each of Qatar Al Shaheen and Iraqi Basra crude between late February and early March.
More crucially, data from Lloyd's List shows that 54 ships transited the Strait of Hormuz between May 11-17, doubling from the previous week's 25 ships. Analysis from Vortexa indicates 19 vessels transited on May 18 alone, including one oil tanker and five Iranian-flagged cargo ships. Although the U.S. continues to block Iranian ports, with some vessels turning off their automatic identification systems to pass, the recovery in traffic volume signals an easing of supply chain pressures.
**Negotiation Tug-of-War: "Deterrence + Consultation" Intertwined, Geopolitical Risk Pricing Fluctuates** In the concurrently advancing U.S.-Iran negotiations, Trump stated the war on Iran would "end quickly," and Vance indicated talks were "progressing well, achieving substantive breakthroughs." However, Trump had previously threatened military action and set a two-to-three-day deadline for an agreement. This "negotiation + deterrence" tug-of-war pattern leads to continuous fluctuations in geopolitical risk pricing, directly impacting the term premium on government bonds and the intensity of safe-haven buying in gold.
**Oil Prices and Inflation: Key Observables for Bond Yield Turning Points** Typically, when the market is not highly focused on oil, rising oil prices lead U.S. 30-year Treasury yields by 3-6 months. At present, with global traders closely watching oil prices, oil price movements quickly transmit to bond yields, especially the 30-year yield due to its longer duration and greater sensitivity to inflation. International oil prices adjusted downward today. However, LSEG analyst Emil Jamil pointed out that even if an agreement is signed, oil supply is unlikely to immediately return to pre-conflict levels, leaving potential for further price increases.
The spillover effects from the earlier Strait of Hormuz blockade have swept globally. Brent crude hit its highest level since June 2022 last month, pushing up inflation stickiness—Eurozone inflation reached 3.0% in April, with energy prices up 10.9% year-on-year, and German inflation hit 2.9%.
**Asset Linkages: Bond Yields Hit New Highs, Gold Valuation Pressured but Attributes Strengthened** Persistently high inflation has directly pushed global government bond yields higher: the UK 10-year yield rose to 5.14% (a new high since 2008), and the German 10-year yield reached 3.12% (a new high since 2011). Simultaneously, the Japanese yen, a key currency for carry trades, has strengthened periodically, and Japanese bond yields have continued to rise, becoming a significant external driver pushing U.S. Treasury yields higher. The Bank of Japan has been urged multiple times to avoid interventions that cause U.S. yields to rise too rapidly.
The negative correlation between bond yields and gold prices is significant (correlation coefficient of -0.83 since 2003). The core valuation of gold depends on the opportunity cost represented by yields. As a zero-yield asset, the opportunity cost of holding gold continues to rise in an environment where global long-term yields are collectively surging. Stable allocation funds are continuously diverted to higher-yielding sovereign bonds, directly suppressing gold's upside potential and keeping its short-term price trend under pressure and weak.
**Capturing the Turning Point: Three Signals in Resonance, Seizing the Gold Allocation Window** To capture the bond yield turning point and gold allocation opportunities, three core signals must be closely monitored: First, stable daily traffic through the Strait of Hormuz exceeding 15 vessels, continuously easing supply chain pressure. Second, the U.S. and Iran reaching a substantive agreement, reducing geopolitical risk premiums. Third, a shift in Federal Reserve policy expectations from "hawkish maintenance" to "restarting rate cut expectations." The emergence of any one of these signals could indicate a yield turning point. The appearance of two signals would confirm the turning point and present an excellent window for gold allocation. More directly, one could also consider gold when equity markets strengthen, as equities are also long-duration, interest-rate-sensitive assets and often react faster than gold.
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