Zhang Yaoxi: Are we entering an era of high oil prices and high inflation? Gold prices are expected to fluctuate and rise amid the chaos.

Zhang Yaoxun: Is a High Oil Price and High Inflation Era Coming? Gold Price Expected to Rise Higher and Swing Amid Turmoil
On the previous trading day, Thursday (April 2): International gold met resistance and fell, closing lower. President Trump’s nationwide address did not convince the market that the war is about to end and that the Strait of Hormuz issue would be resolved; instead, it intensified the conflict. He said that over the next two to three weeks, the U.S. will continue to deliver heavy blows to Iran, boosting crude oil and the U.S. dollar sharply, and pressuring gold price, which plunged nearly 250 U.S. dollars at one point. But in the end, it bottomed out and rebounded. In the U.S. market session, Iran said it is drafting a Strait of Hormuz transit agreement with Oman, easing concerns about inflation. This kept gold still closing above the 100-day moving average line, suggesting that the bulls still hold a certain advantage, and expectations remain for a further upside rebound later on.
In terms of specific price action: Gold opened in the Asian session at $4,757.97 per ounce, first moved higher to record a daily intraday high of $4,800.19. Then it met resistance and pulled back, followed by consecutive sharp drops lower. At the 14:00 segment, it recorded an intraday low of $4,553.93. Finally, it stopped falling. Overall, it swung and rebounded, and eventually closed at $4,668.84 at the end of the U.S. session. The daily trading range was $246.26, it closed down $89.13, a decline of 1.87%.

Outlook for today, Friday (April 3): The international gold market is closed all day due to Good Friday, with no fluctuations. It will open normally on next Monday. As for the U.S. non-farm payroll employment data to be released tonight, judging from the ADP that has already been released and the weekly initial jobless claims at the start of the week, although both were worse than the prior figures, they were still better than expectations. Therefore, non-farm payrolls are likely to come in with a positive figure, which would be bearish for gold. However, since both the year-on-year and month-on-month averages of average hourly earnings in March have declined overall, that would be bullish for gold. Therefore, overall, the impact is still mainly expected to result in range-bound movement. Extending to next week’s opening, gold is also expected to either remain range-bound or continue rebounding higher. In the short term, there is still hope to test the $4,840 or $5,000 level.
On the fundamentals: Even though the U.S.-Iran situation is still not over, and Trump’s repeated back-and-forth continues to keep geopolitical risk persistent, because Iran is drafting a Strait of Hormuz transit agreement with Oman for charging tolls to ships passing through the Strait of Hormuz, this has made the market lean toward the idea that while the ceasefire is not in place, passage is still possible.
Therefore, on one hand, the market will continue to be driven by safe-haven demand. On the other hand, “able to pass” indicates that energy demand is being addressed and demand concerns are easing, but since there will be a fee, costs will rise. As a result, crude oil prices in the future will be in a certain high-level range-bound fluctuation—not a sustained rally, but also not likely to keep falling consistently. Inflation will also remain at high levels, and Iran has the “real-time adjustment power” over global inflation. But I believe the magnitude of this adjustment is limited; it will only change the inflation benchmark and threshold in the future.

As for the U.S., if it accepts the agreement and regains passage, that means the tide of hegemony is receding; if it does not accept, it will have to open the way with military action. And other oil-producing countries will inevitably add to build oil pipelines and route them around the strait, etc. So for now, the situation still isn’t stable, and the market still has a high level of volatility. Trading should remain cautious.
But Zhang Yaoxun believes that the gold market has always been driven by expectations. With the sharp surge in crude oil and the rise in inflation, as well as rate-hike expectations from the Federal Reserve formed as a result, the prior downside to the $4,100 level—can be said to have already played out the worst-case outcome. At present, although the conflict is still ongoing, if passage through the strait is possible, it is relatively controllable. That implies that with inflation likely controllable in the future, the ongoing geopolitical situation will shift toward supporting gold’s safe-haven demand.
Moreover, Federal Reserve Chair Powell said the Fed will wait and see the impact of the war on the economy and inflation, and will not consider rate hikes for now. Federal Reserve governor Mester also said the Fed could gradually cut rates by one percentage point within a year, etc. The market will once again revisit rate-cut expectations. Therefore, whether the geopolitical situation ends or does not end, the market will return again to the Federal Reserve’s rate-cut cycle and structural bullish factors such as central bank gold buying and de-dollarization. That is why I still lean toward the view that this leg of gold’s decline is only a mid-course correction within a larger uptrend cycle. Over the next year, it is expected to still rise again, potentially refreshing new highs.

Technically: On a monthly level, gold’s March closing price is above the rising trendline, maintaining a bullish outlook. This month’s opening is also still positioned above this rising trajectory. As long as the price does not close below this trendline, expectations for new highs will remain.
On a weekly chart level, gold this week, as expected, continued the rebound pattern from last week’s bottoming and stopping the fall, along with bullish formation and rebound momentum, and further strengthened. Although it has not yet broken through the 5–10 week moving average resistance and has held steady while turning stronger, according to the bullish arrangement of the long-term moving averages below and the ZZ indicator not yet showing that the current rebound has topped out, the direction is still bullish. The key resistance to watch is pressure around the 10-week moving average. If it breaks through this level, it has the potential to refresh new highs again.
On a daily chart: Although gold on Thursday was sharply blocked and pulled back, it ultimately bottomed out and closed above the 100-day moving average line. The ZZ indicator did not show that the rebound has topped out, and the attached indicators also maintain a bullish signal development. This suggests that the future price action is still upward-leaning. On the downside, focus on support at the 100-day moving average, or support from the 5–10 day moving averages; on balance, it remains mainly bullish. Continue to wait for it to reach the $4,900 target or the $5,100 target.

Gold: Support to watch below around $4,620 or $4,530; Resistance to watch above around $4,845 or $4,910;

Silver: Support to watch below at $72.10 or $71.00; Resistance to watch above at $76.60 or $78.40;
Note:
Gold TD = (International gold price × exchange rate) / 31.1035
For a $1 move in international gold, Gold TD is about a 0.25 yuan move (theoretically).
U.S. futures gold price = London spot gold price × (1 + gold swap interest rate × days to futures expiry / 365)
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Review historical cause and effect, interpret the current environment, and look ahead to future trends. Adhere to the principle of bold forecasting with cautious trading.–Zhang Yaoxun
The above views and analysis represent only the author’s personal thoughts for reference; they do not constitute a basis for trading. If you act on this information, profits and losses are your own responsibility.
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