- The Middle East ceasefire negotiations have released positive signals, driving crude oil prices to retreat from their highs. Both the international benchmark Brent crude and US oil futures turned downward, alleviating market concerns about a rebound in energy-driven inflation.
- The demand for gold as a safe haven is in a tug-of-war with high interest rate expectations. Spot gold and gold futures are both experiencing synchronized upward fluctuations as the market seeks a balance between the navigation risks in the Strait of Hormuz and the Federal Reserve's policy path.
- Federal Reserve officials continue to send hawkish signals. New York Fed President Williams reiterated that if inflation remains persistent, the option to raise interest rates will be retained. Investors are focusing on the upcoming non-farm employment data.
Easing Geopolitical Tensions Suppress Oil Prices
As the US and Qatar disclose that negotiations on the navigation of the Strait of Hormuz have made progress, the risk premium in the oil market quickly recedes. Brent crude futures fell 1.8% to $82.23 per barrel, and WTI crude futures dropped 2.6% to $78.24 per barrel. The unwinding of short-covering positions, previously accumulated due to supply disruption concerns, indicates a correction in the extreme pricing of supply chain crises. The stabilization and decline in oil prices have reduced the impact of short-term inflation expectations.
Safe Haven Premium vs. Cost of Non-Interest-Bearing Assets
Spot gold rose 0.6% to $4,080.63 per ounce, and gold futures increased by 1.2% to $4,138.00 per ounce. Although the high interest rate environment raises the holding cost of non-interest-bearing assets, the actual navigation volume in the Strait of Hormuz remains scarce, supporting gold's underlying risk-resistant attributes. Traders maintain a range-bound strategy between $4,000 and $4,100, as the market reassesses the combined impact of marginal cooling in inflation and the sedimentation of safe-haven funds on precious metal valuations.
Forex Market Convergence and Macro Data Watch
The US dollar index stabilized after being pressured by yen intervention buying the previous day. The convergence of exchange rate fluctuations temporarily eased the pressure on non-US currencies priced in gold. With the release of the ADP private sector employment report and non-farm employment data approaching, cross-border capital is in a state of cautious observation. The market is attempting to establish the endpoint of the Federal Reserve's interest rate policy through the pace of labor market cooling, maintaining a tight balance in forex market liquidity ahead of key data releases.
Hawkish Statements Reinforce High Interest Rate Expectations
Recent hawkish speeches by New York Fed President Williams and other officials emphasize that if signs of an inflation rebound appear, further rate hikes cannot be ruled out. This policy direction has solidified market expectations for the Federal Reserve to maintain a high interest rate environment. Macro funds are adjusting asset pricing models, increasing the weight of the duration of the interest rate peak, leading to a risk preference for defensive sectors. Rising bond yields continue to constrain high-valuation risk assets.
