Huatai Futures: The market follows the main theme of the US-Iran war, with precious metal prices fluctuating widely

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Source: Huatai Futures

Author: Shi Cheng

Market News and Important Data

Precious Metals Main Logic

1. Regarding interest rates, in March 2026, the 10-year U.S. Treasury yield rose significantly to 4.317%, a gain of 9.42%; during the month, market focus was on the U.S.-Iran war, with the Strait of Hormuz blockade causing a surge in energy prices. The market then began pricing in inflation warming expectations and a slowdown in the Federal Reserve’s monetary easing pace. The Fed kept the federal funds rate target range unchanged at 3.50%-3.75% for the second consecutive time, in line with market expectations. The statement showed that the committee approved the rate decision with an 11-1 vote. Chairman Powell explicitly denied that the U.S. economy is in stagflation, emphasizing that policy stance is appropriate, and that rate cuts require sustained inflation progress. Powell stated that if inflation shows no progress, there will be no rate cuts. Most people do not expect rate hikes as a baseline, but the possibility of further hikes has been mentioned. Currently, Fedwatch indicates that there is almost no chance of rate cuts at the April meeting.

2. Regarding inflation, in March 2026, the breakeven inflation rate reflecting inflation expectations changed by 0.04% to 2.34%. The seasonally adjusted CPI increased by 0.3% month-on-month and 2.4% year-on-year; core CPI rose 0.2% month-on-month and 2.5% year-on-year, all in line with market expectations. However, the market generally believes that the February data did not reflect the impact of the oil price surge caused by the Iran situation.

3. Regarding the exchange rate, in March 2026, the U.S. dollar index changed by 2.29%. During the month, with ongoing escalation of military conflict between the U.S. and Iran, equity markets and high-liquidity assets such as precious metals experienced large fluctuations. Coupled with the cooling of Fed easing expectations, this created a geopolitical environment that further favored the dollar; looking ahead, if the U.S.-Iran war develops into a prolonged conflict, the dollar may further strengthen until clear signs of economic stagflation appear.

4. In terms of market risk pricing, the VIX index rose at the end of March, to some extent pricing in the tough stance of both the U.S. and Iran. Currently, it is difficult to say there is a concrete peace plan in place, so significant uncertainty remains.

Strategy

Gold: Cautiously Bullish

This round of the market saw sharp rises and falls in precious metals prices. Geopolitically, both the U.S. and Iran have repeatedly shifted market expectations regarding a ceasefire, so short-term chasing highs or lows is not advisable. In the medium to long term, if the Strait of Hormuz remains blocked or if the U.S. and Iran fall into military stalemate, precious metals prices will continue to fluctuate until the U.S. shows clear signs of economic stagflation. Overall, gold is still recommended to be bought on dips, but there is a risk of further correction in the short term. Pay attention to the opportunity to buy the Au2606 contract at around 990 RMB/gram to 1070 RMB/gram on dips.

Silver: Neutral

The logic is similar to gold. Due to silver’s higher volatility, it is temporarily advisable to adopt a wait-and-see attitude. However, companies with hedging needs can still buy the Ag2606 contract on dips between 17,000 and 19,000 RMB.

Arbitrage: Buy on dips, long gold-silver ratio

Options: Temporarily hold off

Risks

Profit-taking by long positions

Ongoing rate hikes triggering large-scale liquidity risks (monitor SOFR-OIS spread and ON RRP account balances)

Investment Consulting Business Qualification: Securities Regulatory License [2011] No. 1289

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