Geopolitical easing lowers oil price risk, multiple macro resonances, gold rises against the trend

Huitong Network, September 18—— All are unfavorable factors, so why is gold still rising?

On Friday (September 18) during the Asian and European sessions, spot gold has risen for two consecutive days, continuously setting a new high for the week, currently trading at $4,391/ounce.

This round of market movement is highly characteristic: US Treasury yields from 2 to 30 years are rising across the board, the US dollar index is strengthening in sync, but gold is rising against the trend, breaking the traditional interest rate pricing framework.

The drivers behind this are a combination of Middle East geopolitical dynamics, marginal changes in global inflation, US Treasury curve steepening, a rebound in risk appetite, and policy maneuvers resonating together.

Middle East diplomatic signals released, tail risk of oil price surge eases

The United States has agreed to allow Iranian leaders to attend the United Nations General Assembly in New York, and the Iranian president plans to deliver a speech at the UNGA on the 23rd.

On one hand, Trump stated he is making major decisions regarding the Iran conflict and plans to consult with the six Gulf countries during the UNGA on follow-up plans; at the same time, signals are being sent that the US is maintaining direct communication with Iran and that there is room for negotiation.

The market interprets this as a reduced probability of large-scale military escalation in the short term, and a marked reduction in the tail risk of a crude oil price spike.

The main concern previously weighing on gold prices was the risk of conflict in the Strait of Hormuz driving up oil prices, forcing global central banks to maintain a longer tightening cycle; with oil price expectations cooling, this major bearish factor has been directly removed.

Strong US dollar unable to suppress gold prices, strong buying power from bulls

Japan’s August CPI came in below expectations, pushing up the US dollar index after the data was released.

However, a strengthening dollar did not suppress gold; gold prices continued to climb.

This phenomenon indicates that gold bulls are currently very active in portfolio allocation, willing to buy even at a higher dollar cost, showing strong buying resilience.

Global second derivative of inflation eases, confirming oil price shock was a one-off disturbance

Japan’s August CPI and the eurozone’s August inflation data released in early September both show that the second derivative of inflation is easing in sync, and the acceleration of price increases is starting to slow down.

This set of data confirms that the essence of this round of inflation rebound is a one-off supply shock caused by oil prices, rather than persistent endogenous inflation driven by overheated domestic demand.

Even with the increase in energy prices included in the statistics, Japan’s overall inflation growth rate is still slowing down.

The marginal momentum of inflation rising is weakening, and medium- to long-term concerns about high inflation are easing, supporting gold prices.

US Treasury curve steepening repair benefits long-duration assets

Yields on US Treasuries from 2 to 30 years are rising simultaneously, but the yield curve repair and steepening are ongoing.

A steep curve environment eases valuation pressure on long-duration assets; gold and high-valuation tech stocks both benefit.

Except in extreme cases, a steep curve environment hedged the collective rise in 2- to 30-year Treasury yields today.

Rise in risk appetite, stocks and gold rebound together

Global capital markets are rebounding synchronously, and overall market risk appetite is improving.

At this time, gold is no longer just a safe-haven asset but also part of a broader asset allocation, strengthening alongside risk assets, leading to a simultaneous rise in stocks and gold.

Disagreement between the Federal Reserve and White House policies, forward easing expectations underpin assets

The Federal Reserve’s September policy meeting released a hawkish signal, with the dot-plot retaining the option of another rate hike within this year;

However, the White House is more inclined to avoid excessive tightening dragging down the economy.

The market is betting that the White House will intervene in policy going forward, and forward easing expectations are being repriced, which benefits both gold and tech growth stocks.

Summary and technical analysis:

Readers who have been following the ongoing articles updating on gold’s trend should be well aware of the situation by now, and the price movement of gold aligns with prior analysis; even if readers do not hold gold but tech stocks instead, they likely have not sold in this round of asset rebound, as the logic is very similar to gold.

This round of gold price increase is not driven by a single factor, but is the result of easing geopolitical risks lowering oil price and inflation risks, slowing marginal momentum of global inflation, US Treasury curve repair, resurgent market risk appetite, and policy maneuver resonance.

Going forward, it is necessary to continue tracking the evolution of the Middle East, inflation data in Europe and the US, and the long end of US Treasury yields—these variables will determine whether the current gold rally can continue.

Technical analysis: Spot gold is currently moving almost exactly according to previous article analysis, and is now constrained by the lower edge of the box range; whether it can break through the upper edge will depend more on oil price related events.


(Spot gold daily chart, source: Easy Huitong)

Beijing Time 17:55, spot gold is now quoted at $4,391/ounce.