Holiday turbulence: Gold and oil prices soar! Are domestic futures precious metals stabilizing? Which varieties will become the "dark horse"?

During the Spring Festival holiday, the global macro landscape was unsettled, with major events such as sudden changes in U.S. tariff policies and escalating geopolitical conflicts occurring one after another, causing sharp fluctuations in major asset prices. This added some uncertainty to the domestic market opening after the holiday.

How do major international market events and the rise and fall of foreign traded commodities during the Spring Festival holiday affect the domestic market? Which commodities have opportunities for a rebound? How should traders respond? Let’s look at the opinions of industry professionals.

Data source: Xinhu Futures

Divergence within the Federal Reserve intensifies, rate cut expectations change

In the second episode of the in-depth live dialogue program “Futures Relativity” launched on February 23, Zeng Xing, an expert in global Dinapoli point trading methods and General Manager of U.S. Gold Rate Investment Consulting Co., Ltd., stated that two major recent events in the U.S. market could have significant potential impacts on the future monetary policy path of the Federal Reserve and the global markets. First, the January monetary policy meeting minutes showed clear disagreements among Fed officials regarding interest rate outlooks, mentioning possibilities of rate cuts, pauses, or hikes. Second, the latest data from the U.S. Bureau of Economic Analysis (BEA) indicated that the Fed’s preferred inflation indicator—the December 2025 core PCE price index—grew 3.0% year-over-year and 0.4% month-over-month, both above expectations. Currently, market expectations for a rate cut by the Fed have weakened, with some traders even considering the possibility of a rate hike.

Regarding the disagreements among Fed officials, Zeng Xing said this reflects both a commitment to the Fed’s independence and dissatisfaction among some officials with Trump’s nomination of the new Fed chair, which could increase the rift between the Fed and the U.S. government and potentially cause significant impacts on global markets in the future.

As for key inflation data, Zeng Xing believes the market’s reaction has been somewhat excessive. He explained that official U.S. CPI data has a lag, while real-time data—Trueflation—shows that U.S. inflation remains in a declining trend.

“CME Fed Watch tool indicates that, in the short term, the market’s probability of no rate cut in June has increased, while the chance of a 50 basis point cut has decreased, suggesting a reduced expectation of a rate cut in June. However, for the full year, market expectations for rate cuts remain largely unchanged (possibly three cuts), just possibly later in the year,” Zeng Xing said.

U.S. stock trend remains unchanged, precious metals still have upside potential

Regarding U.S. stocks, Zeng Xing believes that despite short-term volatility, the macro outlook remains positive, with the U.S. stock market still in an expansion phase and a rate cut cycle. Coupled with substantial productivity gains from AI, the overall trend remains upward.

As for precious metals, Zeng Xing thinks gold prices may not have peaked yet and could continue to break new highs in the future. Investors should closely monitor whether monthly charts show double penetration reversal signals similar to those at the 1980 or 2011 peaks. During the Spring Festival holiday, silver prices began rebounding, and this rebound may continue after the holiday, but attention should be paid to geopolitical risks and potential physical delivery crises in the silver market.

“February saw intense volatility in the precious metals sector, mainly due to overcrowded long positions in gold and silver, short-term risk aversion cooling, and market concerns over a shift in Fed monetary policy triggered by the new Fed chair nomination. In reality, the long-term upward trend of gold and silver prices has not changed. Moreover, following the U.S. Supreme Court ruling that Trump-related tariffs were illegal, markets began to worry about the sustainability of U.S. debt, leading to U.S. debt sell-offs and a surge in safe-haven buying that drove gold and silver prices sharply higher. Additionally, ongoing central bank gold purchases and increased holdings by private sectors will remain long-term drivers of rising gold and silver prices,” said Cheng Xiaoyong, Assistant General Manager and Director of the Research Institute at Huawen Futures, during the second episode of “Futures Relativity.”

On the rebound of silver prices during the holiday, Cheng Xiaoyong noted that this was driven by both financial and commodity attributes. On one hand, precious metals as safe-haven assets are favored by financial institutions, with large reductions in silver short positions. Data from CFTC showed that as of the week ending February 17, COMEX non-commercial silver short positions decreased from 19,000 contracts at the end of January to 13,000. On the other hand, silver is a key raw material for photovoltaics, and some PV companies replenished stocks during the February price dip. Currently, the key to de-silvering in PV modules is cost; if silver prices rise, industrial demand for silver is likely to remain stable. Silver prices may then resume their upward trend.

Geopolitical conflicts “shake the market,” crude oil fluctuates

Regarding the volatile international oil prices during the holiday, Cheng Xiaoyong said that geopolitical risks are the core factor driving the sharp rise in global crude oil prices, with short-term supply and demand fundamentals remaining relatively stable.

He explained that on February 19, reports indicated that Trump was considering a “limited-scale” military strike against Iran to pressure it into accepting nuclear deal terms. Since the Strait of Hormuz sees over 21 million barrels of oil passing daily—about 40% of global trade—if Iran blocks the strait, global oil trade could face partial disruption, forcing ships to reroute and significantly increasing transportation costs, which would directly push up oil prices.

“Additionally, short-term factors further increased the space for oil price rebound,” Cheng said. Winter storms affected two-thirds of the eastern U.S., disrupting refineries along the Gulf Coast and impacting local oil production; Trump’s administration’s takeover of Venezuela’s oil sales became a direct catalyst for soaring tanker freight rates. This not only raised transportation costs along key routes in the Americas but also attracted more tankers from other regions, especially the Middle East, further straining shipping capacity. Continued sanctions on major producers like Russia and Iran led to large amounts of crude being stored on ships, with inventories on tankers increasing, delaying ships’ return to the spot market, and further tightening effective supply.

Cheng noted that, from a supply-demand perspective, global oil supply is likely oversupplied. The latest IEA monthly report shows that in 2025, global oil inventories will grow at the fastest pace since 2020, increasing by 477 million barrels, with OECD inventories exceeding their five-year average for the first time in four years. The easing of OPEC+ production cuts, strong non-OPEC supply growth, and ongoing energy transition all influence the supply-demand balance.

Looking ahead, Cheng said that as Trump’s “10-15 day final ultimatum” to Iran approaches, oil prices could follow three paths: first, the U.S. launches limited military strikes, causing prices to rise then fall; second, Iran is forced to reach an agreement, leading to limited price movement but long-term pressure; third, U.S. sanctions remain in place, and prices are likely to stay stable.

“Overall, it’s unlikely that high oil prices will return in the global market. Factors such as ongoing energy transition replacing demand, OPEC+ shifting focus to quota battles, and the weakening of the petrodollar will keep prices oscillating around cost levels. Whether oil prices can break out of this range in 2026 depends on OPEC+ policy shifts, U.S. dominance over oil resources, and whether geopolitical conflicts escalate,” Cheng concluded.

Refined movements in the energy and chemical sectors, agricultural commodities may be “dark horses”

Regarding the upcoming domestic futures market, Cheng Xiaoyong believes that the precious metals sector is likely to see significant gains. “During the holiday, overseas precious metals prices rose sharply, which will support domestic futures prices. However, regulatory measures from exchanges may continue, maintaining high volatility. Investors considering gold and silver should prioritize options and other more stable strategies to cope with potential sharp swings,” he advised.

He also expects the energy sector to rise after the market opens, with energy futures possibly outperforming chemical futures, as energy prices are more directly and sensitively linked to international crude oil prices. In contrast, chemical futures such as PTA, polyester, and plastics face persistent supply-demand mismatches and inventory pressures that are unlikely to change in the short term.

Cheng also highlighted the importance of agricultural commodities. “During the holiday, international markets saw notable gains in soybean oil, palm oil, and wheat. Notably, wheat inventories have declined for four consecutive years. Although large-scale global production cuts are not yet confirmed, current stock-to-sales ratios and market structure suggest wheat may be brewing a rebound. These factors warrant close attention from investors,” he said.

Key risks to watch on the first day after the holiday

Regarding overseas market performance after the holiday, GreenWave Futures’ Chief Expert Wang Jun summarized it as “broad gains, sector divergence, and increased volatility.” He believes that most commodity prices rose driven by macro factors such as the U.S.-Iran conflict, with energy sectors rising sharply and precious metals also seeing significant gains.

For the market opening on the 24th, Wang Jun expects “a broad gap-up and sector differentiation,” mainly driven by catch-up rallies, with some commodities lagging. Among the strongest are precious metals, especially silver, and oil-related products, driven by overseas gains and price spreads; among the weaker are tin, which faces correction pressure.

In terms of specific strategies, Wang Jun emphasized three major risks: first, gap risk—prices of precious metals and oil may open sharply higher, so caution against chasing highs; second, position change risk—monitor major contracts’ open interest changes on the first day to prevent volatility caused by fund exits; third, liquidity risk—prefer trading main contracts, and be cautious with small and deferred contracts, strictly controlling slippage. Overall, the approach should be: light positions, stop-loss, and avoid chasing or panic selling.

(Article source: Futures Daily)