- The U.S. military conducted three rounds of targeted self-defense strikes on Iranian air defense and radar systems in the Persian Gulf, in retaliation for the recent downing of a U.S. military helicopter. This action has further escalated tensions in the Middle East and raised concerns about a complete shutdown of the Strait of Hormuz.
- International gold prices faced heavy selling pressure during Wednesday's Asian trading session, plummeting sharply. Spot gold fell by $71 during the day, briefly dropping below the $4,200 per ounce mark, and technically breaking through the widely-watched 200-day moving average.
- International crude oil prices rebounded rapidly as geopolitical risks intensified. The market's expectations of renewed global inflationary pressures further constrained the room for major central banks to cut interest rates. As a result, non-interest-bearing precious metal assets continue to face short-term valuation adjustment pressures.
Sudden Escalation of Geopolitical Conflict
The U.S. Department of Defense and related officials confirmed that starting at 5 PM Eastern Time on Tuesday, the U.S. military launched three rounds of intensive airstrikes on southern Iran, targeting multiple Iranian air defense facilities and radar systems around the Strait of Hormuz. This was a targeted self-defense response to the earlier downing of a U.S. military helicopter off the coast of Oman. Iranian state media later confirmed that at least six violent explosions occurred on Qeshm Island north of the strait, with loud noises reported around the coastal port cities of Sirik and Bandar Abbas. The Iranian Revolutionary Guard stated via social media that in retaliation, it had launched multiple missiles and drones at U.S. military targets in the region. Iranian Foreign Minister Araghchi issued a public statement emphasizing that Tehran would not ignore any attacks or threats. This direct military engagement threatens the already fragile ceasefire agreement and could lead to a long-term shutdown risk of the Strait of Hormuz, a critical global energy artery, sharply increasing global supply chain uncertainties.
Key Technical Break in Gold
Influenced by risk-averse position adjustments triggered by the latest deterioration in geopolitical situations, spot gold faced strong profit-taking and liquidation pressure early Wednesday in the Asia-Pacific session. Gold prices pierced through the psychological $4,200 per ounce level, reaching as low as around $4,188 per ounce, with an overall daily decline expanding to $71. In the previous trading day, gold prices had already recorded a significant 1.6% drop. Since the outbreak of armed conflict in the region at the end of February this year, gold prices have cumulatively retreated about 20% from their previous highs. More systemically significant is that gold prices in this decline broke through the important technical indicator of the 200-day moving average, which is regarded by global macro hedge funds and large institutional investors as a watershed for determining long-term market trends. Breaking this key reference point triggered larger-scale programmatic algorithmic trading sell-offs, further exacerbating the short-term technical downward momentum.
Energy Rebound Intensifies Inflation Concerns
In terms of commodity linkage and macro policy transmission, as the situation in the Strait of Hormuz falls back into crisis, the international benchmark Brent crude oil, after experiencing a 3% drop on Tuesday due to demand slowdown expectations, quickly rebounded during Wednesday's session. The renewed rise in oil prices has rekindled concerns in global financial markets about structural sticky inflation. If the core energy transport corridor in the Middle East continues to be threatened by military conflict, the widespread rise in commodity prices may force the Federal Reserve and major global central banks to maintain existing high interest rates for a longer period, or even restart the rate hike cycle in the future. Persistently high real interest rates increase the opportunity cost of holding gold, posing a structural macro downside for non-interest-bearing precious metal assets, prompting cross-asset funds to reallocate within the commodity sector and between fixed income markets.
Institutional Positions and Market Support
Suki Cooper, head of global commodity research at Standard Chartered Bank, pointed out in the latest market analysis report that with the renewed rise in expectations for global central banks to maintain high interest rates or raise rates, the short-term trend of gold prices will become more vulnerable. She specifically noted that if gold prices fail to quickly recover the key moving average and trigger further inertia declines, a large number of long-term holdings in gold exchange-traded funds will face the risk of turning into floating losses, which could trigger a second round of institutional investor shakeouts and bring greater downside risk. From a technical analysis perspective, the next important technical support level for gold prices is currently around $4,100 per ounce. Cooper added that although physical demand in traditional core physical consumption markets such as India is relatively weak, the physical gold demand in the Chinese market remains a bright spot, with the premium level of physical gold in the Chinese market stable at below $10 per ounce, indicating that underlying defensive buying interest still exists.
