- Driven by news of the United States and Iran nearing a peace memorandum, spot gold prices rose significantly on Wednesday by $133.29 to $4,690.71 per ounce, marking a 2.93% increase, reaching the highest level since late April.
- Expectations of easing geopolitical conflicts led to a sharp revaluation of energy assets, with West Texas Intermediate (WTI) crude oil plummeting over 7% and Brent crude falling to around $100 per barrel. The weakness in crude oil dragged the US Dollar Index (DXY) down by 0.46% to 98.03.
- Macroeconomic fundamentals show that the US labor market remains resilient, with April's ADP employment numbers increasing by 109,000, reaching a fifteen-month high. Market funds are shifting towards a risk-taking approach before reassessing, with focus on the upcoming non-farm payroll report.
Geopolitical Easing and Risk Sentiment Shift
The global asset movements today are fundamentally driven by the rapid removal of Middle Eastern geopolitical risk premiums. According to multiple sources, Washington and Tehran are deeply engaged in discussions over a one-page memorandum containing fourteen key points, with a thirty-day negotiation process underway. This potential agreement, covering the Strait of Hormuz passage rights and nuclear program restrictions, directly reverses the market's pessimistic expectations of prolonged Middle Eastern geopolitical conflicts. Traditionally, geopolitical easing is accompanied by gold asset sell-offs, but this time gold and geopolitical risks have risen counterintuitively in tandem. This indicates that the core anchor driving gold prices has shifted from a singular geopolitical risk aversion to expectations of macroeconomic liquidity easing triggered by declining oil prices.
Impact of Falling Energy Prices on Inflation Expectations
The oil market's reaction has been the most intense and direct. West Texas Intermediate (WTI) crude prices fell over 7% in a single day, with Brent crude prices retreating to the $100 mark. As a core input variable in global inflation models, the rapid decline in energy prices effectively alleviates market concerns about persistently high long-term inflation. The cooling of inflation expectations directly weakens the necessity for the Federal Reserve (Fed) to maintain an extremely tight monetary policy. Additionally, due to the deep intrinsic link between the dollar and oil prices, the decline in oil prices has significantly dragged down the US Dollar Index (DXY) to a low of 98.03, providing direct upward price support for dollar-denominated precious metals.
Labor Market Resilience and Rate Cut Pricing Dynamics
While digesting geopolitical benefits, macro funds are increasingly divided over the pricing of US domestic fundamentals. The latest April ADP private sector employment report shows an increase of 109,000 jobs, significantly exceeding market expectations and the revised March figure of 61,000. This data indicates that the US labor market continues to exhibit unexpected expansion momentum despite the current high-interest rate environment. Strong employment data theoretically suppresses rate cut expectations, but with the sharp decline in oil prices as a hedge, market participants are currently more inclined to buy into the optimistic narrative of overall macroeconomic easing. If the upcoming official non-farm employment data confirms a marginal softening of the labor market, it may quickly reignite market bets on a shift in central bank monetary policy.
Technical Resistance Test for Spot Gold
From a micro trading structure perspective, spot gold has technically broken through the psychological resistance level of $4,650, with the momentum indicator Relative Strength Index (RSI) accelerating towards the overbought area, indicating that short-term bullish forces are dominant. According to technical analysis, the first substantial resistance range for gold prices is near the downward trend line between $4,700 and $4,715. If momentum continues and effectively breaks through this area, funds may test the 100-day Simple Moving Average (SMA) at $4,760. In terms of downside risk management, $4,600 forms an initial support hub, and if this level is breached, liquidity may seek stronger defense at the lower band low of $4,500 and the 200-day SMA at $4,276.
