Recently, those paying close attention to the global markets should be able to feel the atmosphere of unease. Geopolitical risks are escalating, U.S. Treasury yields are soaring, and all of this is quietly changing the investment logic of gold.

Let's start with the immediate troubles. Iran is once again issuing tough talk, saying that if the U.S. takes military action again, they will increase uranium enrichment to 90%—a threshold that in the international nuclear field signifies weapons-grade uranium enrichment. The two sides are deadlocked over uranium enrichment issues, with the U.S. demanding Iran reduce enrichment to 60% and oppose transporting it to Russia, proposing instead to transfer it to a third country. But Iran is unwilling to export the enriched uranium. Honestly, Iran’s nuclear facilities have been hit multiple times last year, and the underground tunnels in Isfahan have been damaged, with passages blocked by debris, making it impossible to extract in the short term. So, this is more of a political gesture, but the market doesn’t care about these details.

The real risk is that if expectations of a renewed U.S.-Iran war increase, U.S. Treasuries will be sold off, pushing up Treasury yields, which will exacerbate the already severe U.S. debt crisis. Recently, the UK situation has sounded an alarm for the market. The 20-year UK government bond yield soared to 5.734%, hitting a new high since July 1998, up 12 basis points that day; the 30-year bond yield also rose to the highest level since May 1998, at 5.794%.

The surge in long-term bond yields reflects investors’ concerns about the sustainability of UK finances. Prime Minister Sunak’s governing position has been further weakened, and markets worry that his successor will increase borrowing even more. This is not an isolated event—the markets for U.S., Japanese, and UK bonds are closely interconnected, and problems in one can trigger a chain reaction. The 2022 UK pension crisis proved this point.

Looking at the U.S., the 10-year Treasury yield is currently at 4.43%, just a step away from the 4.6% level seen during the “stock, bond, and currency triple kill” last May. If potential risks are not effectively contained, a market panic is expected to ensue.

Speaking of today’s main event—the upcoming release of U.S. CPI data. JPMorgan has issued a warning that the current situation carries the risk of escalating into a stagflation crisis similar to the 1970s. Consumer price growth will likely exceed the Federal Reserve’s 2% target, and rolling inflation shocks will become the norm. Bank of America predicts that the Fed will not cut interest rates until the second half of 2027, with the terminal rate remaining at 3%-3.25%. The core PCE price index is still at a high year-over-year level of 3.2%, and a strong labor market supports Treasury yields.

In the short term, if inflation clearly accelerates, the Fed’s rate cuts will be further delayed, and the 10-year Treasury yield will continue to rise, putting pressure on gold. But in the medium to long term, increasing demand from private investors and central banks for gold provides a stable driving force for its rise. UBS expects gold to potentially climb to around $5,600 within the year.

From a technical perspective, the daily chart of gold shows the AO indicator indicating that bullish momentum remains strong. If gold can effectively break through $4,770 in the short term, there is still potential for further rebound to challenge $4,800 or even $5,000. However, if it falls below $4,550, caution is warranted as further declines toward support below $4,400 could occur.

In summary, geopolitical risks, rising U.S. Treasury yields, and inflation expectations are intertwining to create a complex market environment. Against this backdrop, gold’s safe-haven properties and long-term allocation value are worth paying attention to.