Beware of “fantasy” valuations! Is international spot gold’s near-term consolidation a mere shakeout, or the beginning of a “sell the facts” phase?

In the recent period, international spot gold has been swinging dramatically, with institutions issuing dense comments to interpret market signals. The core viewpoints are summarized as follows for reference.
I. Core market contradiction: the game between geopolitics and fundamentals

At present, the gold market is caught in a tug-of-war between “geopolitical safe-haven” and “peace expectations.” The situation in the Strait of Hormuz has been repeatedly fluctuating, and the market’s pricing logic has shifted from “peace dividend” to a “pricing of rights to access oil.” The earlier rebound in gold prices was driven more by position squeezing and momentum rather than an improvement in fundamentals. Once the assumptions of a strait blockade and energy-driven inflation are shaken, the foundation for gold price gains will face challenges.

Amid short-term fluctuations, after Iran denied a new round of negotiations and tensions rose again, gold prices once fell below the $4,750 level. However, institutions also pointed out that market sentiment is shifting from “safe-haven panic” to “risk appetite.” According to a Kitco survey, 80% of experts still remain optimistic about gold’s long-term push toward $5,000, while only 20% warn of the risk of a pullback that is “buying expectations and selling facts.”

II. Full overview of key driving factors

1. Interest rates and policy: “Wosh hearing” becomes a key milestone
This week, the Fed chair nominee hearing has attracted significant attention. The market expects the nominee to release dovish signals. If rate expectations are lowered, it will reduce the cost of holding gold, becoming an important impetus for gold prices to surge. At the same time, US March retail sales and real estate data will test the resilience of domestic demand. Weak data would reinforce expectations of easing and provide additional support for gold.
2. Supply-and-demand structure: transformation signals from the Indian market
High gold prices are changing India’s traditional gold consumption pattern. During the Akshaya Tritiya festival period, investors shift from physical gold jewelry to digital gold and gold ETFs. This both reflects the suppression of physical demand caused by high gold prices and shows the market’s higher demand for convenience and liquidity. This trend may further strengthen gold’s financial attributes.
3. Medium- and long-term support: the ultimate hedge against stagflation and credit risk
Institutions such as HSBC maintain a bullish view on gold over the medium and long term. The core logic includes: a surge in global fiscal deficits, recurring geopolitical risks, and a rebound in central bank gold-buying demand. Combined with oil prices rising and boosting the risk of stagflation, gold—being a non-yielding hard asset—remains an irreplaceable tool for hedging against inflation and credit risk.

III. Risk warnings and operation reference

In the short term, gold price fluctuations are mainly influenced by the situation in the Middle East and market sentiment. The prior rise relied more on momentum than on fundamentals. “An easy trade” is often difficult to sustain for consistent profits, so the risk of a pullback should be treated with caution. In terms of trading, it is recommended to focus on Tuesday’s Fed hearing, US consumption data, and changes in the Strait of Hormuz situation, to avoid blindly chasing highs.

In the medium and long term, the core logic behind gold’s rise has not changed, but risks arising from high volatility should be kept in mind. For allocation, it is advisable to prioritize gold ETFs or digital gold with better liquidity, to reduce the holding costs and the redemption/cash-out barriers of physical gold.

There are risks in the market; investment involves caution. This article only summarizes institutional viewpoints and does not constitute investment advice.

 #美伊冲突再起引发市场动荡