Analysis: Oil Price Suppression Linked to Interest Rates, Gold Price Under Short-Term Pressure but May Still Have Upside Potential in the Medium to Long Term

BlockBeats News, March 20th, generally speaking, geopolitical conflicts tend to boost market risk-off sentiment, driving up the price of gold. For example, after the outbreak of the Russia-Ukraine conflict in February 2022, the price of gold surged rapidly within two weeks. However, since the US conflict erupted, oil and the US dollar have soared, while gold has shown a consecutive downward trend.

Qiu Rui, Senior Deputy Director of the Research and Development Department at Orient Securities, stated that the ongoing Middle East conflict and the resulting rise in oil prices have pushed up global inflation expectations, which may strengthen the Fed's stance on keeping interest rates unchanged, suppressing precious metals. Adrian Ash, analyst at BullionVault, said, "The timing of future rate cuts by central banks will be further delayed. From a technical standpoint, this is unfavorable for gold." Daniel Ghali, Commodity Strategist at TD Securities, stated, "In the short term, we still believe there is downside risk in the market. Gold still has significant downside potential, but at the same time, it can still maintain the support formed during its bull market uptrend."

Daniel Pavilonis from RJO Futures, a commodities brokerage firm, said that if the current conflict persists, stocks and precious metals will continue to decline, and we may even "see the gold price fall back to $4,200 per ounce." Nicholas Frappell, Global General Manager of ABC Refinery's Institutional Sales, stated that gold has held some important technical support levels on the weekly chart, and the price of gold may rise to around $4,800 per ounce, a level it previously fell below. Carsten Menke, Head of Research at Julius Baer, said that in the tense situation in the Middle East, gold can only truly rise if the financial markets show a more pronounced risk-off sentiment.

CITIC Securities pointed out that after previous Middle East conflicts, the medium-term trend of gold prices still depends on US dollar credit and liquidity factors. Looking ahead to this round of conflict, it is expected that the continuation of the two major trends of loose liquidity and weakened US dollar credit will continue to drive up the price of gold. Bullish on the gold price reaching new highs driving the gold sector's stock prices to new highs. Previously, Bank of America projected that the price of gold would rise to $6,000 per ounce in the next 12 months. UBS expects the international spot gold price to reach $6,200 per ounce in the coming months.