April 20th, gold and crude oil prices diverged again amid the ongoing U.S.-Iran game of chess—gold plunged sharply due to a strengthening dollar, while crude oil gapped higher on fears of the expiration of the ceasefire.

Gold: Opening lower and declining, focus on gap filling

Spot gold opened significantly lower in the morning, dropping over $90 at one point, with the lowest touching around $4,737. It is currently trading near $4,770. The dollar index rebounded strongly on the weekly chart to 98.42, coupled with cooling expectations of Fed rate cuts. U.S. Treasury yields remain high, increasing the holding cost of non-yielding gold, which exerts downward pressure. Technically, on the 1-hour chart, MACD shows increasing green bars and a double-line death cross pointing downward, indicating strong short-term bearish momentum. However, the recent support at around $4,750, the lower boundary of the recent consolidation range, if held effectively, could trigger a rebound. The upper gap is located between $4,795 and $4,835, with a high probability of attempting to fill it during the day. Multiple institutions maintain a medium- to long-term bullish stance, but in the short term, gold prices are weak and volatile under the combined pressure of U.S.-Iran negotiations and a strong dollar. Key focus remains on the $4,750 support and the gap filling strength.

Crude oil: Gap higher, fierce tug-of-war before ceasefire expiration

WTI crude oil futures gapped higher by about 5% in the morning, reaching $91.35 per barrel. Last Friday, influenced by Iran’s announcement of opening the Strait of Hormuz, WTI plunged over 10% to $83.85. Over the weekend, Iran refused a second round of negotiations and reasserted control over the strait. The U.S. military fired upon and intercepted Iranian ships in the Gulf of Oman. With the ceasefire set to expire on April 22, the risk of renewed conflict has sharply increased. However, from a longer-term perspective, structural oversupply pressures persist, with J.P. Morgan estimating Brent crude oil’s average price around $60 by 2026. In the short term, oil prices heavily depend on whether the ceasefire can be extended. After the gap-up, attention should be paid to the actual traffic flow in the Strait of Hormuz and subsequent statements from both sides.

Core driver: The "switch effect" of U.S.-Iran game of chess

The key variable for both assets is highly aligned—control over the Strait of Hormuz between the U.S. and Iran. When Iran announced the opening of the strait, oil prices plummeted, and gold benefited from cooling inflation expectations. When Iran closed the strait again and refused negotiations, oil prices surged, and gold was pressured by a stronger dollar. This "switch effect" causes their prices to be highly negatively correlated. With only two days remaining until the ceasefire expires on April 22, short-term volatility risks for both gold and crude oil are significantly amplified.