Gold prices rebounded over $100 during the day, while oil prices retreated below $100 per barrel. Tensions in the Middle East are causing extreme volatility in global commodity markets, creating a seesaw effect. On Tuesday, April 14, diplomatic developments between the U.S. and Iran triggered a rebound in spot gold, which climbed more than $100 from its lows to surpass $4,770 per ounce, reaching an intraday high of $4,857. Meanwhile, Brent crude fell to around $97 per barrel, and WTI crude dropped below $96. Just one day earlier, the situation was entirely opposite. The breakdown of U.S.-Iran talks in Islamabad, combined with former President Trump's threat to blockade the Strait of Hormuz, sent Brent crude soaring nearly 9% to $103 per barrel and WTI above $105. Gold, however, faced panic selling due to soaring inflation expectations and reduced probability of Federal Reserve rate cuts, with COMEX gold futures briefly falling to $4,626 per ounce. Over the past 48 hours, the market has shifted from "panic selling" to "violent rebound," reflecting real-time repricing of geopolitical risks. An institutional source in Shanghai noted that as the first round of talks broke down and a second round remains uncertain, trading logic is rapidly shifting from a sell-off in safe-haven assets to repricing inflation anxiety. A complete halt to ship traffic through the Strait of Hormuz has intensified long-term supply risk concerns, temporarily restoring gold’s safe-haven appeal. From Surge to Retreat: Gold and Oil Continue Roller-Coaster Ride According to reports, on April 14, diplomatic sources in Pakistan stated that the U.S. and Iran agreed to continue negotiations but still differ on agenda, objectives, format, and location. The back-and-forth in diplomatic progress has led to extreme fluctuations in gold and oil prices. Notably, since the outbreak of the U.S.-Iran conflict in late February, gold has fallen more than 10%, with selling pressure from initial liquidity squeezes still not fully recovered. Meanwhile, WTI crude futures have surged over 45% since the conflict began, climbing to nearly $120 per barrel in March. Currently, although diplomatic signals suggest easing tensions, physical blockades are intensifying. Reports indicate that former U.S. President Trump threatened on April 12 to "blockade" the Strait of Hormuz, with the U.S. Central Command stating it would impose a blockade on all maritime traffic entering and leaving Iranian ports. Robert Rennie, Head of Commodity and Carbon Research at Westpac, noted that the prospect of resumed talks may help limit extreme volatility in Brent and WTI futures. However, he emphasized that even if diplomatic signals keep benchmark oil prices below $100, underlying supply tightness is worsening. As long as cargo flow through the Strait of Hormuz remains restricted, fuel prices will continue to face upward pressure. Foreign investment banks warn that current oil prices do not fully reflect extreme supply shock risks. A J.P. Morgan analyst pointed out that crude forward prices have priced in a "reopening" expectation, assuming Hormuz energy transport will recover to about 50% of pre-conflict levels by May and fully recover by June. If full recovery is delayed until July, oil prices could rise by $15 to $20 per barrel above current levels. UBS believes that, amid multiple intertwined factors, oil prices are more likely to fluctuate within a range in the short term. They expect oil to remain in a relatively high range with significantly increased volatility, shifting market focus from trend prediction to risk management. Commodity Divergence Intensifies, Institutions Recommend Fine-Tuned Trading Faced with geopolitical conflict and liquidity uncertainty, market participants suggest that the phase of uniform safe-haven or rebound strategies has passed. The key going forward will be to grasp the logic of commodity divergence. Capital is no longer simply betting on broad safe-haven sentiment but is making more refined directional choices. Regarding gold trends, an ETF manager noted that after the first round of U.S.-Iran talks broke down, gold is expected to remain relatively strong long-term due to intertwined geopolitical risks, inflation expectations, and market sentiment. However, short-term movements will still be influenced by geopolitical developments. A macro strategy department pointed out that since April, global equities and gold have become less responsive to oil price fluctuations. Short-term market focus has shifted from geopolitical conflict to repricing central bank rate hike expectations. A strategist at Global X ETFs also believes gold is benefiting alongside equities from expectations of eased tensions. Gold prices are now more driven by interest rate expectations rather than purely acting as a hedge against geopolitical conflict. One European bank stated it has repurchased gold after previously reducing its holdings significantly due to market downturns triggered by the Iran conflict. Since the war began, gold prices fell sharply amid concerns over higher interest rates and liquidity tightness, reducing the bank’s gold allocation from about 10% to 3%. However, the bank still expects gold to reach $6,000 per ounce by year-end and has increased its allocation back to around 6%. It was also mentioned that the People’s Bank of China purchased nearly 4.5 tonnes of gold in March, compared to an average of 2 tonnes per month over the past year. Long-term "de-dollarization" trends amid global instability remain intact, providing ongoing support for gold prices. On the oil front, analysts indicate that current oil prices essentially reflect pricing for "deliverable seaborne supply" via the Strait of Hormuz, rather than total crude reserves. Since March, transit volume through the strait has plummeted, shattering market expectations for rapid inventory recovery. Until supply dynamics fundamentally reverse, high oil price volatility is likely to persist. One securities firm highlighted that divergence between energy and metals is intensifying: oil remains strong due to supply shocks, while some industrial metals face demand-side uncertainties. They recommend focusing on chemicals, non-ferrous metals, power equipment, and new energy sectors. Chemicals may see the most obvious price catalysts post-supply disruptions in the Middle East, while non-ferrous metals could gradually reprice resource attributes after liquidity shocks subside. A futures company cautioned that the direction of U.S.-Iran negotiations remains the biggest short-term uncertainty. Until clarity emerges, traders should strictly control positions and remain flexible. Should the second round of talks yield substantial progress, commodity asset valuation relationships may readjust rapidly. Another securities firm believes that as tail risks of war diminish, the actual market impact of negotiation progress is weakening. The key variable ahead will be actual shipping volumes. Prolonged strait disruptions continue to accumulate economic and liquidity uncertainties. After a broad rebound driven by short covering, markets will focus increasingly on specific sectors—particularly AI hardware, resources, cyclical commodities, and dividend-paying stocks.
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