Since March, the gold and silver markets have generally shown a weak and fluctuating trend. Despite the ongoing conflict in the Middle East, precious metals have not experienced a significant safe-haven rally; instead, prices have declined multiple times. Several analysts indicate that during this round of geopolitical tensions, the price movement of precious metals has periodically diverged from market sentiment. The core reason is that the market's trading logic has shifted from "safe-haven demand" to a contest between "inflation expectations and monetary policy."
From an event-impact perspective, Wu Zijie, a precious metals researcher at Jinrui Futures, believes that the market initially amplified not the safe-haven premium from this conflict, but rather the rise in oil prices due to supply disruptions and the resulting global inflationary pressures. As Brent crude prices climbed back above $100 per barrel, market attention quickly turned to whether high oil prices would lead the Federal Reserve to maintain higher interest rates for longer. In this environment, a stronger U.S. dollar and rising short-term U.S. Treasury yields increased the holding cost of gold as a non-yielding asset, making it difficult for safe-haven buying to sustain a one-sided rally.
Zhou Songyuan, a precious metals researcher at Haitong Futures Research Institute, stated that the ongoing tensions in the Strait of Hormuz have significantly increased the certainty of short-term oil price increases. Higher oil prices boost U.S. inflation expectations. If inflation continues to rise, the Fed's subsequent interest rate cut schedule is likely to be disrupted, potentially delaying the first rate cut of the year, which poses a potential downside risk for precious metals. He further explained that since late January, expectations for conflict in the Middle East have been building, and the market had already priced in a significant portion of the conflict risk. When the conflict actually erupted, some speculative capital chose to take profits and exit, leading to a rapid decline in prices. Additionally, the situation in the Strait of Hormuz has, to some extent, strengthened the U.S. dollar's credibility system. The simultaneous rise in the U.S. Dollar Index and U.S. Treasury yields has put downward pressure on precious metal prices.
"The weak performance of the gold and silver markets since March is primarily due to a shift in the market's main trading narrative," said Gu Fengda, chief analyst at Guosen Futures. He indicated that the market's focus has shifted from "geopolitical safe-haven demand" to the interplay between "inflation expectations and monetary policy." The Middle East conflict is pushing oil prices higher, raising market concerns about resurgent inflation, thereby reinforcing expectations that the Fed will maintain high interest rates or even delay cuts. A stronger U.S. dollar directly suppresses gold. In this context, safe-haven buying driven by geopolitical conflict is being offset by the "inflation-monetary tightening" logic, leading to a contest between gold's financial attributes and its safe-haven properties. Silver, possessing stronger industrial attributes and price elasticity, experiences more violent price swings under macroeconomic pressure, typically undergoing deeper corrections than gold.
Xu Ying, a precious metals researcher at Orient Futures Derivatives Research Institute, also noted that as tensions in the Strait of Hormuz cause a sharp rise in oil prices and increase global inflationary pressures, market expectations for Fed rate cuts have diminished while expectations for ECB rate hikes have grown. The strengthening U.S. Dollar Index and rising U.S. Treasury yields, driven by monetary policy tightening expectations, are significantly suppressing gold prices. Against a backdrop of competition among existing capital, some funds have shifted towards crude oil and chemical products, which are more affected by supply disruptions, leading to a temporary outflow of capital from the precious metals market.
Xia Yingying, head of the Precious Metals and New Energy Research Group at Nanhua Futures, believes that the absence of a traditional safe-haven rally in gold prices during this conflict reflects a clash between safe-haven logic and macro pricing mechanisms. Tensions in the Strait of Hormuz boost oil prices, weakening the momentum for disinflation and suppressing Fed rate cut expectations. Rising U.S. Treasury yields and a stronger U.S. Dollar Index lead to higher real interest rates, putting valuation pressure on gold. Simultaneously, the U.S. dollar currently holds advantages as both a safe-haven asset and a source of liquidity, also diverting funds away from gold.
Regarding the future performance of gold and silver, Wu Zijie believes the dominant variables will remain the U.S. Dollar Index, real interest rates, and the Fed's rate cut path, which determine the valuation ceiling and timing for precious metals. Geopolitical situations, central bank gold purchases, and capital flows will primarily influence the slope of the trend and price fluctuation ranges. Whether gold prices can strengthen again later depends on whether oil price pressures ease, whether U.S. inflation data can provide room for rate cuts, and whether the U.S. dollar's current strong performance concludes.
He stated that if oil prices remain high, concerns about the "Fed maintaining higher rates for longer" will persist, and gold prices will likely continue to fluctuate at high levels with repeated back-and-forth movements. Should oil prices fall and U.S. inflation expectations cool, pressure from interest rates and the dollar would ease significantly, allowing gold's upward potential to re-emerge. Overall, the medium-term direction for gold and silver prices is not pessimistic, but short-term movements will still be influenced by the dollar, interest rates, and oil prices, with a rhythm more akin to opportunistic recovery within a range-bound market.
Xu Ying thinks short-term Middle East conflicts remain a key market focus, especially their duration and the navigation situation in the Strait of Hormuz. Regarding the Fed, the U.S. job market has not yet stabilized, while inflation risks are increasing, and financial system volatility is rising, placing its monetary policy in a dilemma. It is worth noting that for the upcoming March FOMC meeting, the market widely expects the Fed to hold rates steady. The outlook for the Middle East conflict is currently unclear, and its impact is hard to predict; the Fed likely needs more time to observe economic performance and may find it difficult to send a "dovish" signal.
In Gu Fengda's view, the core drivers for future gold and silver price movements will revolve around the contest between "U.S. inflation expectations" and "slowing economic growth." In the short term, oil price trends remain a key variable. If oil prices continue to surge, U.S. inflation expectations will rise further, reinforcing the logic of the Fed maintaining high rates, and precious metals will remain under pressure. However, it is important to note that if rising oil prices begin to erode economic growth momentum, the market might shift from "inflation trading" to "stagflation trading." In a stagflation environment, characterized by slowing growth alongside high inflation, gold's inflation-hedging属性 would re-emerge as the core pricing logic, potentially creating a rebound opportunity.
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