GF Securities: Crude Oil Prices Expected to Continue Slow Climb in the Short Term, Gold Prices May Oscillate Short-term

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GF Securities released a research report stating that since the US-Iran conflict, “safe-haven trading” has intensified, risk assets have broadly declined, and global stock markets have experienced huge shocks. Key energy routes such as the Strait of Hormuz have been blocked, escalating Middle East tensions and raising concerns over oil supply, leading to a rapid increase in oil prices. The rise in oil prices has triggered worries about stagflation, gold and other precious metals have fallen, the US dollar has continued to strengthen, and bonds are under pressure. The A-share market shows clear safe-haven characteristics, with the technology growth sector leading the decline, while funds have flowed into stable sectors like coal and electricity.

In terms of asset prices, the major asset classes before the two conflicts generally moved in the same direction, showing safe-haven trading features. However, during the Russia-Ukraine conflict, precious metals performed more strongly. In the short term, based on the asset trends during the Russia-Ukraine war, oil prices are expected to remain high and volatile, and major assets remain highly sensitive to oil prices and war-related information. In the medium term, as the intensity of the conflict decreases, the market will gradually become desensitized to related information, and various assets will gradually revert to fundamental valuation.

Specifically, it is expected that short-term crude oil prices may continue to rise slowly before entering a high-level fluctuation period; gold prices may fluctuate in the short term, with long-term prospects waiting for new narratives; geopolitical events are causing significant disruptions to aluminum supply, and aluminum prices may continue upward; the US dollar index is benefiting fully and may continue to rise; in the equity market, once short-term geopolitical risks are eliminated, the market could present the best bottom-fishing opportunity of the year.

GF Securities’ main views are as follows:

Performance of major assets since the US-Iran conflict:

1. “Safe-haven trading” has intensified, risk assets broadly declined, and global stock markets experienced huge shocks;

2. Key energy routes such as the Strait of Hormuz have been blocked, Middle East tensions escalated, raising concerns over oil supply, leading to a rapid increase in oil prices;

3. Rising oil prices have triggered worries about stagflation, gold and other precious metals have fallen, the US dollar has continued to strengthen, and bonds are under pressure;

4. The internal safe-haven characteristics of the A-share market are obvious, with the technology growth sector leading the decline, and funds flowing into stable sectors like coal and electricity.

Comparison of Russia-Ukraine and US-Iran conflicts:

1. The most critical difference lies in the macroeconomic background at the time of the conflicts. The Russia-Ukraine conflict occurred during a period of high inflation following liquidity flooding, with a clearer inflation path driven by geopolitical tensions pushing energy prices higher. In contrast, the macro environment of the US-Iran conflict involves slowing growth, sticky inflation, and the easing of rate cuts, making the overall transmission path more complex.

2. The Strait of Hormuz and Russian pipelines are both vital energy chokepoints. Although Russian oil is under sanctions, it has been “whitewashed” through India or Turkey, and can transfer major oil exports to Asia to avoid global supply risks. However, the closure of the Strait of Hormuz represents a rigid shock to energy supply with no alternatives, significantly increasing inflation risks.

3. Regarding asset prices, the trends of major assets before the two conflicts were generally similar, showing safe-haven features. However, during the Russia-Ukraine conflict, precious metals performed more strongly.

In the short term, based on the asset trends during the Russia-Ukraine war, oil prices are expected to stay high and volatile, with assets remaining highly sensitive to oil prices and war news. In the medium term, as the conflict intensity decreases, the market will gradually become desensitized to related information, and assets will revert to fundamental valuation.

Specifically, short-term crude oil prices may continue to rise slowly before entering a high fluctuation phase; gold prices may oscillate in the short term, with long-term prospects waiting for new narratives; geopolitical events are causing significant disruptions to aluminum supply, and aluminum prices may continue upward; the US dollar index is benefiting fully and may continue to rise; in the equity market, once short-term geopolitical risks are resolved, the market could present the best bottom-fishing opportunity of the year.

Risk warning: Negotiations involving various parties still carry significant uncertainties; other economies’ trade policies toward China may change; demand from the US and other overseas economies may further deteriorate; domestic economic growth and policies to stabilize growth may fall short of expectations.