Hawkish vs. dovish: Gold and crude oil are betting on the underlying power struggle behind the scenes.

Huitong Finance APP News—— The geopolitical tensions in the Middle East continue to escalate, becoming a core variable disrupting global gold and oil markets.

The Iranian Revolutionary Guard stated this afternoon that the Strait of Hormuz is closed, and any navigation through this waterway will face “severe measures,” while discussions were previously underway for conditional passage.

Before negotiations began, both the U.S. and Israel started to accumulate leverage for their negotiations.

On March 27, Iran launched a new round of missile attacks on Israel, prompting the Israel Defense Forces to activate their air defense systems to intercept incoming targets and issue protective alerts to residents in relevant areas. The military standoff between both sides has not significantly eased.

The diplomatic maneuvering is equally murky; U.S. President Trump has delayed military strikes on Iran’s energy infrastructure by 10 days, while extending the deadline for Iran to reopen the Strait of Hormuz, claiming that negotiations are “progressing very smoothly.”

This marks the third time Trump has adjusted the timeline, from 48 hours to 5 days, and now to a final ultimatum of 10 days.

Due to the previous removal of the assassination list for the Iranian Speaker and President, Iranian President Pezeshkian has appeared in public and visited shops.

As the global energy lifeline, the Strait of Hormuz is currently in a state of actual interruption due to conflict.

Data shows that the strait accounts for 15% of global oil transportation and 20% of liquefied natural gas transport, with recent shipping volumes plummeting by 95% compared to pre-conflict levels. In the past week, the average number of passing vessels was only 5 (down from about 125), with around 1,100 various vessels stranded in the Gulf, and the risk of disruption to the energy supply chain continues to escalate.

Overview of the Basic Goals of All Parties:

Currently, the overall situation is such that although the Revolutionary Guard claims no passage is allowed, Iran has been frequently communicating with neighboring countries, and the U.S. claims to have received a “great gift” from Iran regarding the potential release of vessels in the strait. The possibility of conditional passage is increasing, and this seemingly contradictory situation suggests that there are many aspects of U.S.-Iran relations that have not been brought to the table.

For the U.S.: controlling navigation rights in the Strait of Hormuz, stabilizing oil prices, maintaining the petrodollar, forcing Iran to compromise at low costs, and avoiding a full-scale ground war are its primary objectives.

For Israel: eliminating Iran’s missile and nuclear threats, destroying its proxies, and leveraging U.S. support for precise strikes to ensure absolute military superiority in the Middle East are its main considerations.

For Iran: firmly defending the interests of the Revolutionary Guard (personnel, industry, military power), partially closing the strait to buy time, and avoiding a catastrophic war.

This mutual goal-oriented tug-of-war may ultimately lead to limited airstrikes combined with diplomatic stalemate, avoiding full-scale war: Iran maintains partial access to the strait to safeguard core power; the U.S. suspends strikes and eases some sanctions; Israel weakens Iranian proxies, returning the situation to a stalemate.

While the U.S. has 10,000 troops that cannot sustain a full-scale war, they can serve as a targeted deterrent during negotiations, enhancing the negotiation atmosphere, with the goal still aimed at negotiation.

Iran, facing communication interruptions and ineffective communication among its senior officials, should ideally resist by buying time while preserving its physical deterrence; this could lead to an increase in oil prices. However, if a 10-day period of easing is granted to Iran, and the Revolutionary Guard’s senior officials fully deliberate, they may ultimately choose a dovish approach to negotiations. This scenario could lead to a rapid decline in oil prices.

Oil Price Rebound, New Market Expectations Forming

The market has begun to shift its considerations from whether the Strait of Hormuz will open to new expectations, with the expectation that even if the strait opens, oil prices or production costs may remain high. The recent backwardation structure in crude oil’s term structure indicates that producers will deplete their inventories quickly.

As they can obtain cheaper raw materials later, there is a need to manufacture and sell products at high prices now, creating a new expectation that regardless of whether the strait opens, oil prices will remain high for some time.

Due to producers’ passive replenishment resulting from inventory depletion, this will inadvertently drive up oil prices and the prices of raw materials, which is one reason why oil prices have risen rather than fallen after Trump’s delay in strikes.

(Brent Crude Oil Term Structure Overview)

Gold Market: Dual Game of Safe-Haven Support and Inflation Pressure

During the Friday European and American trading sessions, spot gold (XAU/USD) saw a spike and then a pullback, rising over 1% to around $4,450.

Although concerns about oil prices have not dissipated, the recent continuous risk releases in precious metals have weakened the downward momentum.

The mid-term upward opportunities for gold still exist, as every time WTI crude oil approaches $100, it tends to trigger Trump’s window guidance. Furthermore, with gold experiencing significant adjustments, there is a possibility of a swift recovery, as the market has priced in the worst outcomes, and any positive news will support gold. Conversely, negative news may not lead to significant declines in gold. The recent continued bottoming out of U.S. tech stocks while gold begins to rebound serves as evidence.

At the same time, if the U.S. and Israel can forcefully open the Strait of Hormuz, gold may enter a sweet spot of pricing amid expectations of continued conflict but easing oil prices.

However, from a market logic perspective, the longer the conflict continues, the stronger the upward momentum of oil prices, which will accelerate global inflation expectations and prompt central banks worldwide to release strong policy signals, which is indeed unfavorable for gold.

European Central Bank President Lagarde has clearly warned that the previous round of inflation shocks has just passed, and market participants are more sensitive to rising energy prices again. The non-linear characteristics of energy shocks may force monetary policy to respond strongly, and hawkish statements from central banks will directly weaken the appeal of non-yielding assets like gold.

Oil Market: Supply Disruptions Drive Prices, Rebound Faces Divergences

As the world’s most important energy passage, the Strait of Hormuz handles 37% of global seaborne crude oil and 19% of refined oil transport. Any obstruction to its navigation directly leads to an expanded global energy supply gap, becoming a core driver of rising oil prices.

However, it is worth noting that in recent weeks, crude oil prices have not breached previous highs, and there are significant divergences in market expectations for future trends.

Nordnet Bank analyst Jan von Greiff pointed out that even with frequent news from the Middle East and significant market volatility, crude oil prices have yet to reach new highs, reflecting that the market has partially priced in the impact of the conflict.

From the supply side, the U.S. Treasury has relaxed sanctions on a significant amount of Iranian oil that has already been shipped to sea, aiming to stabilize supply during energy market fluctuations and somewhat alleviating supply tightness.

At the same time, Nordnet Bank originally anticipated that the Middle East conflict would tend to ease, with limited long-term impacts on energy prices, but the probability of this steady scenario has significantly decreased.

The European Central Bank has also warned that the Middle East conflict has significantly increased uncertainty in economic outlooks, both raising inflation risks and suppressing economic growth prospects. The mid-term trajectory of crude oil prices will depend on the intensity and duration of the conflict and its transmission to the real economy.

The Interconnected Logic of Gold and Oil: Geopolitical Resonance and Divergent Paths

In the short term, the geopolitical safe-haven resonance occurs when conflict escalates and triggers market panic, activating gold’s safe-haven characteristics alongside oil’s supply security concerns, driving both to rise simultaneously.

After the announcement of Iran’s missile attacks and the closure of the Strait of Hormuz, gold rose over 1% and oil prices topped $100, demonstrating this logic.

Secondly, the mid-term divergence of inflation and monetary policy, as oil serves as a fundamental industrial energy source, its price increase directly pushes up global inflation expectations, while gold, as a traditional anti-inflation asset, should theoretically benefit equally.

However, in reality, high inflation pressures central banks to adopt hawkish monetary policies. The European Central Bank has clearly stated its commitment to “unconditionally guarantee the mid-term 2% inflation target,” and the Federal Reserve may also delay rate cuts due to inflation pressures.

A high-interest-rate environment will significantly increase the opportunity cost of holding non-yielding assets like gold, while the petrodollar settlement mechanism will strengthen the dollar further, thereby suppressing the price of gold denominated in dollars and creating a “strong oil, weak gold” divergence. This is also a core reason for the rare divergence between gold and oil since March.

Thirdly, the interplay of market sentiment and capital rotation will impact one another. When conflicts focus on energy supply (such as the closure of the Strait of Hormuz), capital will preferentially position itself in the oil market for arbitrage, leading to reduced gold ETF holdings, while the Middle East may need to discount gold to acquire dollars and other assets for risk hedging. Conversely, when the conflict spreads and raises concerns about economic recession, gold’s safe-haven priority will surpass that of oil, and capital will flow back into precious metal assets.

Summary and Technical Analysis:

If Iran can maintain a strong negotiating stance and its military does not quickly collapse, oil prices are likely to remain high. In this case, the opening of the strait could be a good opportunity for bullish positioning, as oil prices may continue to stay elevated, since Iran can still threaten control of the strait. However, if negotiations see Iran making excessive concessions, it may affect the central point of crude oil and lead to significant recovery opportunities for gold and tech stocks.

In simple terms, as long as control of the Strait of Hormuz remains in Iran’s hands, the potential shock to oil prices from the strait’s opening may actually present a profitable positioning point, and oil prices are expected to continue to remain high.

From a technical perspective, spot gold barely held the 4427 level, which corresponds to the Fibonacci 0.500 level of this wave’s upward movement, and there is still potential for a second bottoming out, with a stable hold needed for a reversal to be possible.

(Spot Gold Daily Chart, Source: Huitong Finance’s Yihuitong)

WTI crude oil futures have currently broken through the Fibonacci 0.618 level of this wave’s upward movement and are expected to continue rising, challenging the price level of 105.89.

(WTI Crude Oil Futures Daily Chart, Source: Huitong Finance’s Yihuitong)

As of 22:13 Beijing time, spot gold is currently quoted at $4,454 per ounce, and WTI crude oil futures are quoted at $97.24 per barrel.

(Author: Wang Zhiqiang HF013)

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