Zhang Yao Xi: Reviewing History to Predict the Future, Crude Oil Doubled First, Gold Climbed After

Zhang Yaoxi: Reviewing the past to predict the future, crude oil doubles first, gold rises afterward
Last week in the gold market: International gold prices retreated and declined, recovering from the previous week’s lower shadow, but again falling below the 5-week moving average, with bears holding a certain advantage. Although Trump repeatedly stated that the war would end soon, reducing market inflation concerns, buying interest in gold was hard to sustain. Meanwhile, ongoing blockades of the Strait by Iran and signs of easing geopolitical tensions boosted the bullish outlook for oil prices, continuing to drive inflation fears, suppressing rate cut expectations, and causing gold prices to decline again.
Before gold prices stabilize above the 5-week moving average and close steadily, the market is expected to fluctuate and adjust, waiting for a pullback to test the midline support (currently around $4,600). If prices rise back above the 5-week moving average and stay above $5,200, then a bullish move toward $5,400 or $5,600 can be anticipated.
In terms of specific trends, gold opened early in the week at $5,179.47 per ounce, initially dipping to $5,014 before rebounding. It failed to hold above the midline and 30-day moving average support. After reaching a weekly high of $5,238.30 on Tuesday, bullish momentum weakened, and prices started to decline consecutively, falling below the 30-day moving average again on Friday, and hitting a weekly low of $5,009.60. Eventually, it found some support and rebounded, closing at $5,024.58. The weekly range was $228.7, down $45.55 from the previous close of $5,070.13, a 0.9% decline.

Looking ahead to Monday (March 16): International gold opened at $4,999.1 per ounce, quickly rebounding to fill the gap, but the bullish momentum remained below the moving average resistance, failing to strengthen, indicating a continued tendency to decline during the week.
Additionally, crude oil opened higher over the weekend due to unresolved geopolitical tensions, but the formation of an alliance by the US and other countries to escort ships through the Strait of Hormuz eased concerns about oil premiums, leading to a weaker start after the initial rally.
While this supports gold prices, the overall trend remains upward, with Iran showing a firm stance and not fearing other countries’ escort efforts, which keeps the market optimistic and continues to fuel inflation fears, limiting gold’s rebound potential.
Furthermore, although the US dollar index opened weaker, supporting gold prices, its trend remains in a rebound phase with no clear signs of weakening, so before gold prices rise above $5,200, they still face adjustment pressures.
Fundamentally, according to Zhang Yaoxi: The current safe-haven attribute of gold is diminishing. Under the influence of crude oil’s dominant fluctuations, the inflation concerns driven by oil prices will not only weaken rate cut expectations but also strengthen the US dollar, which is bearish for gold. This reduces gold’s safe-haven appeal.

Currently, the Fed’s rate cut expectations have weakened. If inflation and expectations continue to rise, then rate hike expectations will dominate the trend, leading to sustained consolidation or downward movement in gold prices.
However, in the longer term, even if geopolitical tensions persist and inflation heats up, it could resemble the period from 2020 to 2022, when oil prices surged from zero to $129.4 per barrel, US inflation rose from 1.23% to 8%, and the Fed raised rates sharply seven times. During that period, gold mostly fluctuated around $400 before rebounding and climbing higher.
Comparing this to July 2007 to August 2008, when international oil prices doubled from $70 to $140 per barrel amid the subprime mortgage crisis, gold also experienced a correction followed by a continued bull run.
Additionally, due to US debt and recession issues, even with rate hikes, the impact would be limited, making the likelihood of aggressive rate hikes beating inflation very low. This could further intensify stagflation fears. Moreover, the Fed’s data shows that the M2 money supply growth rate has stagnated around 4% over the past year, suggesting inflation may not rise as sharply as expected. Therefore, gold may remain within a broad range without reversing the overall bull trend.

If geopolitical conflicts end, gold prices could return to the expectation of rate cuts, resuming their upward trend. Under current conditions of long-term geopolitical uncertainty, central bank purchases, and ongoing rate cut cycles, all negative factors are short-term pressures, and gold still has prospects for further bullish movement. The corrections and declines in the first half of the year can be viewed as entry points.
On a technical monthly chart, gold has shown some weakness this month but remains above the 5-month moving average and above the upward trendline broken in January, indicating a still-positive bull market outlook. If prices continue to fall this month, support levels are at the May (around 4800) or October (around 4400) moving averages, which could serve as new bullish entry points.
Conversely, if prices break below the trendline support and close below the 4300 level, it would signal the end of the bull market, with potential declines toward $3,500 or even lower.
On the daily chart, gold prices are currently declining and trading below short-term, midline, and 30-day moving averages, with bears holding the advantage. The market is oscillating after an initial rally, and the ZZ indicator shows a bottoming out of the decline, suggesting limited downside space and potential support for a rebound near the 60-day or 100-day moving averages.

Gold: Support levels at $4,955 or $4,870; resistance levels at $5,070 or $5,120.
Silver: Support levels at $78.30 or $75.10; resistance levels at $81.00 or $83.00.
Note:
Gold TD = (International gold price × exchange rate) / 31.1035
A $1 fluctuation in international gold prices roughly causes a $0.25 change in Gold TD (theoretical).
US futures gold price = London spot price × (1 + gold swap rate × days to expiry / 365)
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Reviewing historical cause and effect, interpreting current environments, and projecting future trends—adopting bold predictions with cautious trading principles. – Zhang Yaoxi
The above opinions and analyses are solely the author’s personal views, for reference only, not trading advice. Operate at your own risk.
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