Gold Nears ‘Ten Straight Days of Decline,’ Liquidity Squeeze to Dominate Short-Term Trend

BlockBeats News, March 24th, against the backdrop of escalating tensions in the Middle East, the surge in energy prices has triggered a chain reaction that is putting pressure on the precious metals market. Spot gold once fell by about 2% during the session, although it briefly rebounded above $4400 during the European session, it still remains in a weak range overall. If it falls again on the same day, it will set a record for the 10th consecutive trading day decline.

Market analysis points out that the current decline in gold is not a failure of traditional logic, but a typical dominance of "liquidity squeeze." As oil prices rise, boosting inflation expectations, investors are forced to sell off highly liquid assets, including gold, to offset losses in stocks, bonds, and other assets or to meet additional margin requirements. This "selling of quality assets to cover losses" behavior is more common in extreme volatility environments.

Previously, Trump announced a delay in the strike on Iran's power grid, briefly providing support for the gold price. However, Iran subsequently sent a tough signal, coupled with news that U.S. allies may be involved in the conflict, further intensifying market uncertainty. At the same time, shipping in the Strait of Hormuz has been disrupted, further magnifying energy supply risks.

Institutional views generally believe that gold will remain under pressure in the short term. Standard Chartered Bank pointed out that after intense market volatility, a 4 to 6-week adjustment period for gold is not uncommon; Swiss Re analysts stated that during major crises, gold is often used as an "ATM" to quickly raise funds to meet liquidity needs.

From a historical perspective, whether it was the 2008 financial crisis or the early stages of the 2022 Russia-Ukraine conflict, gold has experienced similar phased pullbacks after a rise in risk aversion sentiment. Despite short-term price pressure, analysts generally believe that the long-term logic supporting gold—including geopolitical risk, global inflation pressures, and continued buying by central banks worldwide—has not undergone fundamental changes.