Everbright Futures 0323 Gold Commentary: Oil Prices Push Up Inflation Expectations, How Much Further Until Gold Reaches the Bottom?

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London Spot Gold Continues to Shift Lower for the Third Week in a Row, Opening Further Down on Monday with a 3% Drop During the Session. Global Macro and Geopolitical Shocks Hit Simultaneously. As Oil Prices Rise, Global Inflation Expectations Reignite. Last Week, the Federal Reserve Maintained Its March Interest Rate Decision, Keeping Rates Unchanged. The European, UK, and Japanese Central Banks Also Held Rates Steady, Suppressing Gold Prices. Geopolitically, No Short-term Ceasefire Signals Have Emerged. The U.S. Limited Iran’s 48-hour Access to the Strait of Hormuz, Threatening to Destroy Its Power Plants. Iranian Media Reported That Iranian Officials Proposed Six Conditions for a Ceasefire.

Last Week, the Fed Announced Its March Rate Decision, Holding the Federal Funds Rate for the Seventh Consecutive Time. However, the Dot Plot Showed Expectations of Rate Cuts in 2026 Dropped from Two in December to Only One, with the First Cut Delayed to Year-End. Powell Acknowledged “Stalled Inflation Decline” at the Press Conference, Emphasizing that Rising Tariffs and Oil Prices Are Creating Additional Pressure and Gradually Feeding Into Core Inflation. Cooling Down Goods Prices Might Not Happen Until Mid-Year. The Market Interpreted This as Hawkish. Economic Data Showed February New Home Starts Plunged 11.2% MoM, Significantly Worse Than Expected, Indicating High-Interest Rates Are Again Suppressing the Real Estate Market. Conversely, the March Philadelphia Fed Manufacturing Index Jumped to 23.1, a Two-Year High, Showing Resilience in Manufacturing.

On the Geopolitical Front, U.S.-Iran Tensions Continue to Escalate. The Strait of Hormuz Shipping Issue Remains a Market Focus. Iran Warned That If Infrastructure Is Attacked Again, It Will No Longer Restrain Its Response. The U.S. Military Might Seize the Island to Force Iran to Open the Strait.

The Fed’s Hawkish Stance Has Been Mostly Absorbed by the Market. Investors Will Focus on Future U.S. Inflation Trends. If Inflation Expectations Rise Significantly, It Will Reinforce the Hawkish Logic of the Dot Plot, Possibly Leading to a Second Rate Expectation Adjustment. More Importantly, Attention Will Remain on U.S.-Iran Tensions. The Military Confrontation in the Strait of Hormuz Is Gradually Escalating Toward “Pre-Fire” Stage. Whether the U.S. Will Deploy Ground Troops Is a New Focus. Currently, Rising Oil Prices Are Increasingly Concerning, Forcing the Fed Into a Dilemma of “Combating Inflation” Versus “Preventing Recession.” Market Volatility in U.S. Financial Markets Could Trigger Liquidity Concerns, Potentially Pressing Gold Prices Down Again. However, If U.S.-Iran Tensions Persist, Gold’s Safe-Haven and Inflation Hedge Attributes Will Be Re-ignited. Therefore, We Are Not Pessimistic About Gold Prices in the Near Future. The Geopolitical Risk Premium Will Gradually Manifest Over Time. Strategically, We Recommend Buying on Dips and Holding, Especially After the Rapid Release of Short-Selling Sentiment, Which Provides Better Entry Opportunities. Silver, Platinum, and Palladium Are Moving in Tandem with Gold, Increasing Trading Difficulty. Gold’s Role as a “Safe Harbor” Metal Is Significant. Watch When Gold Prices Return to an Uptrend and Wait for the Right Moment.

Written by: Li Qi

Professional Qualification: F3046227

Trading Advisory Qualification: Z0016145

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