Everbright Futures: Oil prices push up inflation expectations, how far is gold from the bottom?

London spot gold has been moving downward for three consecutive weeks, continuing to decline at the opening on Monday, with intraday drops reaching 3%. The global macro and geopolitical landscape are experiencing double shocks. As oil prices rise, global inflation expectations are increasing again. Last week, the Federal Reserve kept interest rates unchanged in its March rate decision, and the European, UK, and Japanese central banks also maintained previous rates, suppressing gold’s performance. Geopolitically, no short-term ceasefire signals have appeared yet. The US limited Iran to 48 hours to open the Strait of Hormuz, threatening to destroy its power plants. Iranian media reported that Iranian officials proposed six conditions for a ceasefire.

The Fed’s hawkish stance has been largely digested by the market. Investors will focus on future US inflation changes. If inflation expectations rise significantly, it will reinforce the hawkish logic of the dot plot, potentially triggering a second revision of interest rate expectations. More importantly, the market will continue to focus on US-Iran conflicts. The military confrontation in the Strait of Hormuz is gradually escalating into a “pre-firing” situation. Whether US ground forces will intervene has become a new concern. Currently, rising oil prices are increasingly prominent, which will also put the Federal Reserve in a dilemma of “fighting inflation” versus “preventing recession.” Market volatility in US financial markets may cause liquidity concerns, possibly further suppressing gold prices. However, if the US-Iran conflict persists, it will also revive gold’s dual role as a safe haven and inflation hedge. Therefore, we are not pessimistic about gold prices in the future. The geopolitical risk premium will gradually emerge later. Strategically, it is recommended to adopt a buy-the-dip and hold approach, especially after the rapid release of short-selling sentiment, which provides investors with a better entry opportunity. Silver, platinum, and palladium currently follow gold’s fluctuations, making trading more difficult. Gold, as a precious metal “stabilizer,” plays a significant role. Pay attention to when gold prices return to an upward trend and wait for the right moment to act. (Everbright Futures)