Gold plunges, crude oil soars, a chaotic battle between bulls and bears in global commodities

Trump’s speech stirs global commodities markets.

On April 2, international gold prices plummeted sharply around 9:00 a.m., turning from gains to losses, with the lowest touching around $4,649 per ounce, while Brent crude oil surged past $106 per barrel, rising over 5% intraday.

Prior to this, risk aversion sentiment warmed, and international gold prices steadily climbed this week to reach the $4,800 mark.

Institutional analysts told Yicai that the logic of geopolitical risk pricing is fracturing, and the market has entered a “fast in, fast out” trading mode, with volatility risk becoming a key variable testing investors’ risk management capabilities. As Trump declared that “in the next two to three weeks, there will be extremely fierce strikes on Iran,” this commodities game dominated by geopolitical tensions may continue to exhibit high volatility risks.

Gold’s safe-haven logic shifts, fierce battle between bulls and bears

According to Xinhua News Agency, U.S. President Trump delivered a speech on the evening of April 1 (Beijing time April 2 morning), claiming a “quick, decisive, overwhelming victory” in the Iran conflict.

Subsequently, global assets experienced intense fluctuations, with gold leading the way. As of press time, spot gold was at $4,673 per ounce; COMEX gold futures fell 2.6%, to $4,688 per ounce. Earlier, international gold prices had risen for four consecutive days.

“Today’s early movement in the gold market is not just a simple technical correction,” said a trader. He noted that gold prices just recovered the $4,800 level, only to see a “big plunge” minutes after Trump’s speech, reflecting the current market’s fragility and speculative nature. Both bullish and bearish funds are showing rapid entry and exit, significantly amplifying gold’s volatility.

Dongwu Securities analysis indicates that the current geopolitical risk pricing shows a clear “pulsed” characteristic: news triggers sharp rises, while expectations of a turnaround or fulfillment lead to stampede-like exits. Shenwan Hongyuan Futures Research Institute believes that although short-term suppression factors for precious metals have eased, the market has not formed a consensus on a unilateral rally, and fierce battles between profit-taking and safe-haven demand have caused intraday swings to widen sharply.

Huatai Securities suggests that recent gold price declines are mainly due to liquidity squeezes, as investors tend to hold cash when facing risks, leading to sell-offs in assets like gold. A comparable macro scenario can be seen during the 1973-1975 oil crisis, when gold prices experienced two declines and two rises, with liquidity squeezes caused by risk aversion and recession being the main reasons for the price drops.

Regarding the future of gold prices, institutional views are notably divided. Copper Crown Jinyuan Futures pointed out that, based on recent gold price strength relative to silver, the market’s “stagnant rally” logic is gradually approaching, but it is still too early to say that the correction in precious metals has ended, and the gold-silver ratio is expected to further recover.

Meanwhile, Goldman Sachs maintains its long-term bullish stance, expecting gold to reach $5,400 per ounce by the end of 2026, but also warns that if the Hormuz Strait remains troubled, gold could face further short-term selling pressure.

Additionally, institutions have simulated the subsequent trend of the conflict; even if the geopolitical event ends, it may not necessarily be a purely negative factor for gold. IG market analyst Tony Sycamore said that if the conflict ends, it could be a double-edged sword for gold. On one hand, if a lasting peace agreement is reached, safe-haven buying during the war might weaken; on the other hand, if oil prices fall and inflation pressures ease, market expectations of Fed rate cuts in 2026 could rise again, potentially supporting gold.

Geopolitical premium lifts oil prices, institutions say “can’t go back to $65”

Compared to the sharp fluctuations in gold, the oil market’s performance appears “more directional and energetic.” On April 2, Brent crude oil broke through $106 per barrel, rising 4.78% intraday.

The geopolitical premium has elevated the oil price center. During this rally, WTI crude oil futures climbed from around $65 per barrel, reaching as high as $113 in March, with a monthly increase of 51% and an year-to-date gain of 83%.

Rob Rennie, head of commodities research at Westpac Banking Corporation, analyzed: “Trump’s speech hasn’t changed the fundamental reality— the Strait has been effectively closed for a month, and oil flows remain severely restricted. Disruptions could continue for at least several weeks or longer.” He added that Brent crude is expected to trade in a range of $95 to $110 per barrel in the short term.

According to CCTV News, on April 1, U.S. President Trump stated that the U.S. no longer needs the Strait of Hormuz, and neither does it need it now. For countries relying on the Strait to access oil, Trump urged them to either “buy oil from the U.S.” or directly “grab oil” through the Strait.

“Even if there’s a ceasefire tomorrow, oil prices won’t go back,” is the common view among market institutions on oil pricing logic. Andy Lipow, president of Lipow Oil Associates, believes that even if the conflict ends tomorrow, oil prices could immediately fall by $10 to $15, but will not return to the pre-conflict level of around $65. The market has already begun to price in higher geopolitical risk premiums for the Middle East.

Copper Crown Jinyuan Futures further analyzed that current geopolitical signals are still switching back and forth, with significant divergence in market expectations. Even if the Middle East conflict ends, concerns about prolonged high oil prices disrupting the global economy remain strong, making it difficult for prices to revert to previous levels.

Moreover, supply chain wounds are unlikely to heal quickly. Shenwan Hongyuan Futures believes that even if the Strait of Hormuz reopens immediately, restoring the entire supply system—including repositioning tankers, adjusting routes, restoring capacity, and restarting refineries—will take a long time. Although geopolitical tensions have eased on the surface, this is likely just a verbal de-escalation, with substantial disagreements still unresolved and high uncertainty.

Pay attention to “Trump’s rhythm,” beware of tail risks

Faced with the current market volatility driven by geopolitical factors, many institutions believe that the global asset pricing logic has shifted and have proposed new strategies.

Dongwu Securities noted in a research report that the current market’s rise and fall are heavily influenced by overseas factors, especially the so-called “TACO” rhythm (alternating escalation and de-escalation of conflicts triggered by Trump). They advise investors to wait for clearer developments before making further investment decisions.

Shenwan Hongyuan Futures recommends from a risk hedging perspective that if there is no substantive progress in peace talks or if conflicts unexpectedly escalate in the coming weeks, oil prices could spike again. Investors should closely monitor US-Iran diplomatic feedback and the movements of U.S. ground forces; meanwhile, for gold, given its long-term upward trend, short-term volatility could provide opportunities for medium- and long-term allocation.

Statistical agencies generally warn that within the “next two to three weeks” window, volatility trading in gold and the reconfiguration of geopolitical premiums in oil will be the two main focus points for global investors, with high tail risks also warranting vigilance.

Huatai Securities emphasizes that grasping the investment rhythm amid risk events is crucial. The report states that, according to CFTC positioning data, net long positions of asset management institutions have decreased by 32% from 134k contracts on January 13 to 91k on March 24, reaching a nearly one-year low, suggesting marginal selling pressure may be easing. It further warns that before the Strait reopens and the oil dollar cycle resumes, investors should remain cautious of liquidity squeeze risks similar to those in mid-1974.

Yao Yuan, senior investment strategist at Orient Futures Asset Management’s Asia Research Institute, advises investors to distinguish between short-term trading and long-term allocation. In the short term, geopolitical developments are unpredictable; overexposure to risk assets should be reduced, with increased cash holdings, and hedging through energy, commodities, and derivatives.

For long-term allocation, Yao recommends increasing holdings of gold and physical assets to hedge against geopolitical structural risks, diversifying into Europe and emerging markets to offset U.S. retreat effects, and expanding into AI and energy transition sectors.

Duty editor: Su Xiao