Repeated Middle East tensions combined with rising US inflation, gold remains volatile at high levels

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　　During Monday's Asian session, the international gold market showed a distinct divergence in trends. Despite ongoing escalation of geopolitical risks, gold prices

　　From the perspective of event background, the Middle East situation has once again become the market focus. Due to the lack of progress in prolonged weekend negotiations, tensions between the US and Iran have significantly escalated. The US announced blockade measures on key waterways, raising fears of disruptions in energy supplies. Against this backdrop, crude oil prices soared, with WTI crude oil jumping approximately

at the beginning of the week and currently trading near . The rapid surge in energy prices has directly reinforced market expectations for future inflation.

　　

year-on-year, higher than the previous value of , with a month-on-month increase of , significantly above the prior level; the core CPI was year-on-year and increased month-on-month. This data indicates that inflationary pressures remain resilient and has cooled market expectations for the Federal Reserve

　　In this environment, gold's appeal as a non-yielding asset is being suppressed. Persistently high interest rates mean the opportunity cost of holding gold increases, thus eroding its allocation value. Although geopolitical risks typically benefit gold, the current market is more focused on how rising inflation impacts monetary policy, putting short-term pressure on gold’s performance.

　　

remains robust, supported by interest rate expectations, further limiting gold's upside. In addition, input cost inflation caused by rising oil prices could prolong the tightening cycles of major global central banks, continuously weighing on precious metals'

　　From a global market point of view, the current structure reflects a typical "energy-driven inflation" dynamic. Rising oil prices affect not only energy costs but also transmit through transportation and production chains to a broader spectrum of commodity prices. Such a structural inflation environment inclines the market toward yield-generating assets rather than non-yielding safe-haven assets.

　　In terms of market sentiment, investors are rebalancing risk and reward. The previous one-way bets on geopolitical risk are gradually shifting toward a comprehensive assessment of macro policy paths, thereby weakening gold's safe-haven property in the short term. Investors are now focused on the ensuing trend of oil prices, policy signals from the US, and whether the Middle East situation will escalate further.

　　

　　Editor's Summary

　　In summary, the current gold market is at a pivotal point where multiple factors are intertwined. While geopolitical risks continue to offer certain support, inflation pressures driven by oil prices and stronger US inflation data have markedly heightened expectations for the Federal Reserve to maintain higher interest rates, thus suppressing gold. Future trends hinge on two core variables: first, whether the Middle East situation escalates further to disrupt actual supply, and second, whether US inflation remains elevated, thereby delaying the timeline for rate cuts. If inflation persists at high levels, gold may remain under pressure; however, if risk events intensify, safe-haven demand could still drive gold prices to rebound. All in all, gold is likely to stay rangebound at high levels in the short term, searching for direction between macro policy and geopolitical risk.

Editor: Zhu Henan