Recently, the trend of gold has been quite interesting. Last Monday, gold gapped down at the open, directly breaking through $4,700, with the lowest dropping to $4,648. The logic behind this is quite clear—U.S.-Iran negotiations have encountered problems again. The Iranian government directly rejected the U.S. peace plan, demanding compensation for war damages and the lifting of sanctions on Iranian oil. Trump immediately responded that this was "completely unacceptable." A breakdown in negotiations means the Strait of Hormuz could remain blocked, which would have a substantial impact on global oil prices and economic expectations.

I noticed a report from Morgan Stanley that is particularly worth paying attention to. They emphasized that the oil market is "racing against time," and if the blockade continues into June, the factors that previously stabilized oil prices might become ineffective. Although the market has already lost nearly 1 billion barrels of supply, due to buffers in place earlier, crude oil futures have not yet broken through the highs of 2022. However, as inventories decline and the time to reopen the strait is pushed back, the possibility of international oil prices breaking historical highs is increasing.

Here is an interesting paradox. In the short term, the deadlock between the U.S. and Iran will drive capital back into the dollar, and gold, as a non-yielding asset, may face selling pressure. Coupled with rising inflation expectations, the Federal Reserve is unlikely to cut interest rates and may even raise them again, which is unfavorable for gold. But from a medium-term perspective, it’s a different story. The labor market remains solid, the key strait closure re-emphasizes inflation concerns, and the U.S. debt-to-GDP ratio continues to rise—these factors are changing market expectations. Once a scenario of a triple decline in stocks, bonds, and currencies occurs, gold’s attractiveness as an alternative to the dollar will significantly increase.

From a technical standpoint, gold has continued to rise after finding support at $4,550, indicating increasing bullish sentiment. If gold can hold above $4,700, it may challenge the psychological barrier of $5,000, and even reach $5,200. So, will gold go up? The key still depends on when the Strait of Hormuz is reopened, how the U.S.-Iran negotiations develop, and whether the U.S. economy is truly heading into recession. There may still be volatility in the short term, but in the medium term, there is indeed room for gold to rise.