CITIC Futures: Amidst geopolitical expectation fluctuations, gold prices enter a short-term high-level consolidation

Trump’s speech on one hand stated that the conflict is nearing an end, while on the other hand, he indicated that there may still be “extremely severe” strikes against Iran in the next two to three weeks. This statement did not provide a clear path to ceasefire, but it has prompted the market to lower risk pricing under the most extreme scenarios. Previously, gold prices continued to rise, trading on the escalation of geopolitical conflicts, as well as on energy and inflation spillover risks from disruptions in the Strait of Hormuz, while also being affected by expectations of weakening U.S. growth prospects and the Federal Reserve being forced to loosen policy. Currently, the market is beginning to realize that if the conflict does not quickly spill over into a larger regional war and remains in a stage of high-intensity confrontation and repeated policy statements, the short-term momentum for gold to continue its unilateral upward move has weakened. Meanwhile, rising oil prices heighten inflation concerns, indicating that the Federal Reserve’s room for rapid rate cuts in the short term remains limited, and the rebound of the U.S. dollar index also suppresses gold prices. Additionally, ahead of the holiday, funds actively reduce risk exposure, leading to a significant pullback in gold prices. If the situation in the Strait of Hormuz does not further worsen and the U.S. does not immediately expand its military strikes, gold may maintain a high-level, oscillating, and somewhat weaker pattern, with market trading focusing more on geopolitical premium unwinding and interest rate expectation adjustments; but if Iran’s situation escalates again, especially with increased expectations of U.S. ground intervention or deeper blockage of the strait, gold could once again gain support from allocation and safe-haven buying. (CITIC Futures)