- The spot gold (XAU/USD) price fell sharply by $53.32 from its intraday high during the Asia-Pacific trading session on Monday, reaching a low of $4300.06 per ounce. This was mainly due to the dual pressures of escalating geopolitical tensions in the Middle East driving up oil prices and renewed expectations of a Federal Reserve (Fed) interest rate hike.
- The Israel Defense Forces (IDF) officially confirmed precision airstrikes on central and western Iran, with reports of loud explosions in cities such as Tehran, Tabriz, and Isfahan. The escalation of geopolitical conflict directly pushed international oil prices up by more than $2 per barrel, exacerbating global market concerns about rising inflation.
- Cleveland Fed President Beth Hammack suggested that persistent inflation might require early interest rate hikes. Coupled with last Friday's strong non-farm payroll data, this has fully boosted expectations of the Fed's tightening monetary policy. Since the outbreak of the Middle East conflict at the end of February, non-interest-bearing gold assets have adjusted by about 15%.
Geopolitical Escalation Triggers Global Asset Repricing
According to the latest reports from Fox News and Reuters, the Israel Defense Forces (IDF) officially announced that its air force had conducted airstrikes on multiple terrorist regime targets in western and central Iran, in retaliation for a previous wave of ballistic missiles launched by Iran towards northern Israel. The Iranian Revolutionary Guard Corps (IRGC) later stated that the Israeli military used air-launched ballistic missiles in this operation. The explosions heard in core cities like Tehran, Tabriz, and Isfahan mark a significant escalation in geopolitical tensions since the ceasefire on April 8. The uncertainty of the Fed's monetary policy, combined with the risk of a breakdown in US-Iran negotiations, has led to a rapid contraction in overall risk appetite in the capital markets.
Rapid Rise in Energy Prices Intensifies Global Inflation Concerns
Directly impacted by the renewed escalation of conflict, crude oil futures prices in the Asia-Pacific session on Monday quickly rose by more than $2 per barrel. Market analysts are concerned that if regional conflicts in the Middle East further expand, they could affect key energy transport routes, leading to renewed risks of global supply chain disruptions. The rise in oil prices directly intensifies financial market concerns about inflation remaining high in the long term. If core inflation rebounds due to rising energy costs, the anti-inflation achievements of major global central banks will face severe tests, further weakening market expectations for a shift to looser monetary policy.
Hawkish Fed Officials Suppress the Appeal of Non-Interest-Bearing Assets
Following last Friday's stronger-than-expected non-farm employment report, Cleveland Fed President Beth Hammack clearly pointed out that the latest labor market data shows supply and demand are roughly balanced and close to full employment. However, persistently high inflation may require the Federal Reserve (Fed) to raise interest rates as soon as possible to control it. Since spot gold itself is a non-interest-bearing asset, when global benchmark interest rates are forced to remain at historical highs or even have the potential to rise further, the opportunity cost of holding gold will increase significantly, directly causing gold to remain under pressure in the face of strong economic data.
Gold Bulls' Defensive Line Faces Macro Variable Tests
From the market trend perspective, spot gold has significantly retreated from its intraday high of $4353.38 per ounce and is testing the key support level of $4300.06 per ounce. Since the outbreak of the Middle East conflict at the end of February, gold prices have cumulatively fallen by about 15%. Although US President Donald Trump publicly stated that he still hopes to resolve the conflict with Tehran through negotiations, before concrete diplomatic results are achieved, market pricing faces reevaluation. If core inflation data resumes its upward trend due to the rebound in oil prices, the defensive line of gold bulls may be repriced by the market.
