Hello everyone. Looking at the screens today, we see that global markets are sending conflicting signals. On one hand, there are increasing tanker attacks in the Strait of Hormuz and rising oil prices; on the other, gold has slipped below $4,000, while Bitcoin is struggling to hold its ground at the $80,600 level. So, what does this picture tell us? Let’s examine it with a calm, investor-focused perspective.

First, it is necessary to understand the reason behind Brent crude oil climbing above $117. This rise is not merely a result of a supply-demand imbalance. The tanker attacks in the Strait of Hormuz have created serious security concerns regarding the global energy supply. Last week, daily oil shipments passing through this strategic waterway fell to 12.6 million barrels—well below the 15 million-barrel level seen at the end of September. The fact that shipping costs have risen to over $37 per barrel indicates that the market is taking this risk quite seriously. In other words, the increase in oil prices reflects a geopolitical risk premium.

So, why is gold falling in this environment? Typically, geopolitical risks tend to support gold. However, the situation here is different. Rising oil prices are fueling concerns that inflation will remain persistent and that the Federal Reserve may continue its interest rate hikes for longer than anticipated. Indeed, ahead of the Fed’s interest rate decision, gold has dipped below $4,000, losing a significant psychological threshold. The market is currently pricing in the expectation that high inflation will delay any interest rate cuts. This, in turn, increases the opportunity cost of holding gold, which yields no interest.

As for Bitcoin, it currently sits at the $80,600 level—caught right between these two opposing forces: geopolitical risks and inflation concerns on one side, and the prospect of a potential interest rate hike by the Federal Reserve on the other. The market is currently fixated on the Fed’s decision, due this Wednesday. While the vast majority of economists expect the Fed to keep interest rates unchanged at this meeting, the possibility of a hike in December remains on the table. The fact that Bitcoin has managed to hold above $80,000 amidst this uncertainty suggests that it continues to be perceived as a "risk asset." As rising oil prices fuel inflation and the Fed’s hawkish stance becomes more apparent, the pressure on Bitcoin could intensify.

In short, the market is currently caught in an "inflation-interest rate" spiral. Rising oil prices drive up inflation, which in turn pushes interest rate expectations higher. This chain of events weighs on gold, while keeping Bitcoin confined within a tight trading range. In the coming days, statements from the Fed and developments in the Middle East will determine the direction for these three asset classes. For me, the most critical indicators will be whether the movement in oil prices proves sustainable and how the Fed chooses to address inflation.

This text does not constitute investment advice. The analysis is based on publicly available information.

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