High oil prices suppress expectations of interest rate cuts, and precious metals fluctuate and adjust accordingly.

(Author Liang Yonghui is Deputy General Manager of Zhaojin Refining Co., Ltd.)

1. Recent Market Situation Analysis

1. Geopolitical tensions ease, risk aversion cools down

Recently, tensions in the Middle East have eased. Although the US-Iran conflict continues, its intensity has decreased, and crude oil prices have gradually retreated after significant fluctuations. With G7 countries coordinating the release of strategic petroleum reserves and signals from various parties indicating negotiations, market concerns over supply disruptions have eased.

The premium support from geopolitical risks for precious metals is weakening. Historical experience shows that geopolitical conflicts tend to push gold prices in “pulsed” waves; once the situation clarifies, safe-haven funds gradually withdraw. Currently, market focus is shifting from geopolitical risks to fundamental factors, and investors should be alert to potential price corrections as risk sentiment recedes.

2. US employment data weakens, monetary policy outlook becomes complex

US non-farm employment data for February showed weakness, with employment decreasing by 92,000 and the unemployment rate rising to 4.4%, both below market expectations. However, wage growth remains resilient, and inflation pressures have not fully subsided.

Weak employment data should have strengthened expectations of rate cuts, but high oil prices pose imported inflation risks, complicating Federal Reserve policy decisions. The market currently exhibits stagflation characteristics—“economic slowdown but sticky inflation”—which limits room for monetary easing. The Fed is expected to remain data-dependent, with rate cut timing possibly further delayed. The US dollar’s trend continues to exert downward pressure on precious metals, which warrants attention.

3. Central bank gold purchases continue, diversification of reserves is clear

Data from the People’s Bank of China shows that as of the end of February 2026, China’s gold reserves stood at 74.22 million ounces, marking the 16th consecutive month of increases. Meanwhile, global central banks’ gold purchase pace has diverged, with some countries planning to sell gold reserves due to fiscal needs.

Analysis: China’s continuous gold accumulation reflects strategic considerations to optimize international reserve structure. Amid accelerating adjustments in the global monetary system, increasing the proportion of “non-credit assets” helps enhance the safety and stability of reserves. However, investors should note the relationship between central bank gold purchases and market prices—central banks buy more for long-term strategic allocation rather than short-term price speculation, so this should not be overinterpreted as a direct driver of gold prices. From a global perspective, the reserve strategies of emerging market central banks versus developed markets differ, reflecting varied risk perceptions among economies.

2. Market Trend Outlook

1. Short-term volatility remains difficult to break

This week, precious metals markets showed range-bound fluctuations influenced by multiple factors. Easing geopolitical tensions, a rebound in the US dollar, and cooling expectations of rate cuts act as resistance to upward movement, while central bank gold purchases and economic uncertainties provide support below.

Currently, gold prices are at a critical decision point. Technically, the $5,000–$5,200 per ounce range has become a battleground for bulls and bears; a breakout in either direction requires new catalysts. Investors should monitor: 1) upcoming US economic data guiding Fed policy; 2) whether new developments occur in Middle East tensions; 3) changes in global central bank gold purchase pace. Until the trend becomes clearer, range trading may be a more prudent strategy.

2. Medium- to long-term allocation value remains

Despite increased short-term volatility, the medium- to long-term logic for gold allocation remains unchanged. From a macro perspective, structural factors such as high global debt, reshaping of geopolitical patterns, and diversification of the monetary system underpin gold’s foundation. For domestic investors, moderately increasing gold holdings in asset allocation can help diversify risks and strengthen portfolio resilience. However, note that gold prices are at historical highs; chasing higher prices involves risks. A phased, long-term holding strategy is advisable.

3. Silver’s performance may lag behind gold

Silver, with both commodity and financial attributes, often underperforms gold amid slowing industrial demand. Currently, trading interest in silver has declined, and off-market premiums have narrowed, reflecting cautious investor sentiment about economic prospects. If global economic recovery remains weak, industrial demand support for silver will further weaken. Investors should remain relatively cautious about silver.

First Financial’s exclusive original publication, this article reflects only the author’s views.

(This article is from First Financial)