Crude Oil Opportunities Emerge in Volatile Markets as Gold Faces Selling Pressure
Geopolitical Deadlock Persists
Over the weekend, the U.S.–Iran conflict has approached the two-month mark, and the negotiation deadlock remains unresolved. The Strait of Hormuz is still blocked—regardless of whether the blockade is enforced by Iran or the United States, a large number of vessels remain stranded in the strait. Although financial markets have reacted relatively optimistically, with U.S. equities rallying while oil prices fluctuate and commodities remain broadly subdued, the underlying situation has not materially changed.
Market Reaction and Inflation Outlook
Persistently high oil prices will gradually feed into inflation over time, so any sudden surge in prices should not come as a surprise. Meanwhile, a shooting incident occurred during Trump’s White House press conference over the weekend; as there were no casualties, it is unlikely to have any meaningful impact on financial markets.
Deferred Crude Futures Repricing
The continued blockade of the strait has exceeded market expectations, forcing financial markets to reprice deferred crude oil futures contracts. Last week, deferred contracts (September–December) have already begun to catch up, and the spread between near-month and deferred futures still stands at around $12 per barrel. Although this spread has narrowed from earlier levels, it does not hinder the strategy of maintaining long positions in deferred crude oil futures.
Crude Oil Strategy and Technical Levels
Under the current news backdrop, investors should recognize that crude oil is primarily a short- to medium-term trading asset (3–6 months). It does not offer the kind of long-term trend opportunities seen in assets like gold or equity indices. Moreover, this is a U.S. midterm election year. If Trump manages to resolve the Strait of Hormuz shipping issue, he will have strong incentives to push oil prices lower to gain political advantage, which could trigger a rapid correction in oil prices. Investors should therefore pay close attention to timing.
From a technical perspective, oil prices are currently tracking the 10-week moving average; as long as this level holds, short-term pullbacks can be ignored. Meanwhile, the WTI September contract is facing a key resistance level at $85 per barrel. A breakout above this level could make it relatively easy for the contract to catch up with spot prices (potentially exceeding $100), which warrants continued attention.
Gold Market Pressure Dynamics
Due to the blockade of the strait, revenues for Gulf countries have declined sharply. As a result, these countries are being forced to liquidate high-quality liquid assets to balance domestic fiscal needs. Given that Gulf nations have accumulated gold in recent years, they currently have the incentive to sell, which contrasts sharply with last year’s gold market that lacked a clear bearish force. This dynamic has contributed to increased volatility in gold prices.
This selling pressure is closely tied to the persistence of the blockade and is largely confined to Middle Eastern countries, meaning it does not represent a full trend reversal.
Gold Strategy and Technical Outlook
However, if investors assume that gold has already bottomed, they may be vulnerable to further downside driven by potential escalation in the U.S.–Iran conflict (a drop below $4,000 per ounce?). Therefore, patience is still advised.
From a technical standpoint, gold prices are currently oscillating near the 20-week moving average and face a critical directional choice. A move higher would return prices to the previous uptrend channel, while a move lower could lead to another test of the lows. The key catalyst for a breakout will depend on the outcome of U.S.–Iran negotiations.
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