#夏日创作营 Read this one article to understand why gold, crude oil, and the US dollar are all rising together behind the truth
Over the past two days, in macro terms, we’ve actually seen a rare phenomenon: gold, crude oil, and the US dollar are all rising together. You have to know that for most of this year—since the US-Iran conflict at the beginning of March—crude oil and gold have basically been like a seesaw.
The logic is: geopolitics escalates into war, the Strait of Hormuz is shut, oil prices rise, inflation rises, and gold falls.
But these past two days, the US-Iran conflict has become tense again. The United States carried out airstrikes on Iran for 12 straight days, and oil prices surged instantly to above $90. Normally, gold should fall. But strangely, while crude oil is rising, gold this time is rising along with crude oil too—giving everyone the feeling that gold’s safe-haven appeal is back. So, is everything really back?
First, the answer: this gold “rise in tandem” is indeed for hedging. But it’s not hedging against the risk from geopolitics; what it’s really hedging is debt risk. What this reflects is the market’s current concern about a credit crisis among sovereign states worldwide. To explain this clearly, you need to bring “US Treasuries” into the conversation.
In recent times, the price of US Treasuries has been steadily falling, and US Treasury yields have been surging. You should know that there’s a widely recognized indicator in the market for whether US Treasuries have risk—such as when the yield on 30-year US Treasuries stands above 5%. Or when the yield on 10-year US Treasuries reaches above 4.5%. The market will interpret either situation as US Treasury prices having fallen too much, and if left unaddressed, liquidity risk may follow. Simply put, those two indicators are basically warning signals.
So what’s the situation now? The warning lights are basically flashing non-stop. The yield on 30-year US Treasuries has stayed above 5% for 12 straight days. In 2024 so far, there have been 27 trading days where the 30-year Treasury yield was above 5%. You have to know that this is the longest continuous stretch in the nearly 20 years since the 2007 financial crisis.
Last year, during the China-US trade war and tariff war, yields on US Treasuries also spiked unusually. But every time last year when the 10-year Treasury yield hit 4.5% or was about to get there, Trump would Taco. But this year, Treasury yields have been surging like this, and Trump is still unmoved—carrying on as usual, wanting to strike whenever he wants. So, is it that Trump doesn’t want to?
No. The main reason is that the initiative in this war doesn’t even lie in Trump’s hands. He may want to Taco, but he simply can’t Taco. Today, the Strait of Hormuz is essentially a full-on “chicken game.” Whoever blinks first will have to give ground at the negotiating table afterward.
So right now, both sides are busy trying to see who can be tougher. Today you blow up my ship, tomorrow I’ll blow up your bridge. Today you blow up my bridge, tomorrow I’ll blow up your data center. That’s why Trump can’t Taco. This also means US Treasuries have to “stand firm on their own.” But the key is that if US Treasuries try to stand firm purely on their own, they can’t hold out. On one side, the bond issuance volume is still rising—for example, the US government keeps issuing new debt. US AI companies also keep issuing bonds to raise funds. But on the other side, the pool is limited, and the Federal Reserve is unwilling to cut rates, so money is being drained bit by bit. That’s why people worry about the sustainability of the bond market. The bond credit crisis is born this way.
When facing the credit crisis of US Treasuries, the question everyone asks is: are there any assets that aren’t tied to the creditworthiness of any sovereign state? After looking around, the only one left standing is gold. That’s why gold has been rising recently.
So the current rise in crude oil reflects concern about energy. Gold’s rise reflects concern about the credit crisis. When they rise together, it’s essentially “macro events happening to resonate at the same time,” creating a combined impact.
So someone might ask: what happens next?
Most likely, there will be differentiation.
Because whether it’s the US dollar, US Treasuries, or crude oil and gold, their rise and fall basically follow the same logic chain: war breaks out, oil prices are high, inflation surges, which lifts rate-hike expectations, leading to a stronger dollar, which pushes up US Treasury yields; the US Treasury credit crisis becomes too high, which leads to gold rising.
But war is full of variables. You have to know that Trump is forced to fight.
On one hand, the previous ceasefire memorandum didn’t define who the Strait of Hormuz belongs to or is managed by—this is the focus of later negotiations. If war happens now, it becomes bargaining leverage later.
On the other hand, if the US were to compromise easily without fighting, it would damage America’s overall strategic interests and voice in the Middle East. Even the hawks in the US stock market would think Trump is too soft. So yes, it should be fought—but it won’t be fought so fiercely that it costs America its entire fortunes and lives.
You can’t allow fighting to break US Treasuries and cause a systemic financial crisis in the US—otherwise it would be not worth it.
So how do you judge when it’s going to fight and when it won’t? It’s simple: look at oil prices. Around 70, it “calls for war.” Around 100, it “TACO.” So when oil prices are low, Trump goes all out. But when oil prices rise and inflation surges, it not only affects the midterm election, but also triggers concerns about internal financial risks as Treasury yields spike.
Therefore, a ceasefire and talks can happen at any time. And once the ceasefire happens, oil prices will fall.
Then will gold fall as well?
First, the answer: in the short term, it may; but in the medium to long term, it may not.
You have to know that the new Fed chair, Kevin Warsh, since taking office, has already achieved multiple goals through “rate hikes using words”:
1. In the short term, it temporarily raised US Treasuries, which in turn pushed up the US dollar.
2. It suppressed the bubble in US stocks, triggering deleveraging across global stock markets. But once it continues to show such toughness, the marginal effects may start to diminish.
So at the end-of-month Fed meeting, changes are likely. If the market finds hints of rate cuts from Kevin Warsh’s comments at the meeting, the US dollar index should retreat, and gold would likely rebound more easily. But if you really want gold to move more solidly, you need to wait until news of actual Fed rate cuts is firmly in place.
$XAUUSD
