Everbright Futures 0520 Gold Commentary: Inflation Concerns and Hawkish Expectations Pressure Gold Prices, Short-Term Outlook Remains Weak

Overnight, COMEX gold futures fluctuated and weakened, with market sentiment remaining cautious and gold prices lacking upward momentum.

On the geopolitical front, as the prospects for US-Iran negotiations show no signs of improvement and the Hormuz Strait navigation issue remains unresolved, not only is the patience of both sides being tested, but market tolerance is also gradually weakening. The Hormuz Strait is one of the world's most critical energy transportation channels, and the prolonged deadlock has kept crude oil prices elevated, reinforcing global inflation concerns. Worries about inflation have triggered swings in global bond markets, with the US 30-year Treasury yield approaching 5.20% during trading—the highest since 2007. These bond market fluctuations have sparked risk-off sentiment in financial markets, driving the US Dollar Index higher, while overseas financial markets continue to adjust, causing gold to perform poorly as well.

On the macro events front, some media reports indicate that Trump will preside over the oath-taking ceremony of Kevin Walsh on Friday. The market is paying close attention to Walsh's first official remarks, which may have already been partially priced in due to expectations of his hawkish stance. Currently, the precious metals market is undergoing three major tests: First, the US economy remains resilient but faces the threat of renewed inflation, causing renewed disappointment for rate cut expectations; second, Kevin Walsh will soon officially take office as the new Federal Reserve Chair, and in the context of persistently high inflation, the market worries that his initial statements will also be hawkish, dampening expectations for liquidity; third, the US-Iran ceasefire agreement is on the brink of collapse, raising concerns that patience on both sides will be exhausted and conflict may flare up again, especially as the Hormuz Strait issue remains unresolved, posing a greater risk to energy markets.

Overall, under the triple pressure of unresolved geopolitical risks, persistent inflation concerns, and hawkish Federal Reserve policy expectations, gold is still facing significant downward pressure. High oil prices reinforce sticky inflation, bond market volatility lifts the dollar, and all of these factors are clearly negative for gold prices. Strategically, investors are advised to lower their expectations for gold prices in the first half of the year, maintain a buy-on-dip allocation approach, but avoid holding overly large positions. It would be better to wait for statements from the new Fed Chair and clear signals of a shift in the US-Iran situation before considering increasing exposure.

Source: Everbright Futures Research Institute

Author: Yao Tao

Professional qualification: F3082336

Trading advisory qualification: Z0018553

Editor: Zhu Henan