- Spot gold climbed over $60 during the day to around $4,570 per ounce, mainly driven by the marginal push from substantial progress in US-Iran geopolitical negotiations.
- International crude oil futures and the US dollar index were significantly pressured simultaneously, with WTI crude oil dropping over 5% and the dollar index retreating to around the 99.00 mark.
- The interest rate swap market is frequently adjusting expectations for Federal Reserve tightening, with the probability of a 25 basis point rate hike in December, as reflected by CME FedWatch, adjusted to nearly 40%.
Optimism from US-Iran Negotiation Breakthrough and Reconstructing Risk Premium
Spot gold recorded a strong rebound during the North American trading session on Monday, with gold prices quickly rising after breaking previous resistance levels, achieving an overall intraday gain of over 1.3%. The core catalyst driving this round of precious metal asset revaluation comes from the unexpectedly eased Middle East situation. US President Donald Trump publicly stated that multilateral negotiations between Washington and Tehran are progressing in an orderly and constructive manner. This positive diplomatic statement has begun to structurally shake the high geopolitical risk premium that had been long embedded in global asset pricing due to Middle East conflicts, with funds reallocating towards spot gold longs under the framework of macro liquidity redistribution.
Resonance Mechanism of Crude Oil Plunge and Dollar Retreat
Accompanied by positive signals from the negotiations, global commodity and foreign exchange markets experienced a dramatic asset repricing on Monday. Feedback from shipping and energy channels suggests that potential agreement content may include extending the ceasefire period by 60 days, phased reopening of the strategically significant Strait of Hormuz, and a comprehensive lifting of the US maritime blockade on key Iranian ports. Driven by these expectations, West Texas Intermediate crude oil futures prices plummeted significantly, with a drop of over 5% intraday. Meanwhile, the US dollar index, which measures the dollar against a basket of six major currencies, also retreated from its highs, dipping to around the 99.00 mark. The decline in oil prices and the weakening of the dollar formed a strong macro synergy, realigning the pricing of gold in currency markets with the Federal Reserve's rate hike expectations.
From a deeper macro perspective, the possibility of a US-Iran agreement is fundamentally distorting the long-term macro narrative that had been suppressing gold prices. Since the outbreak of the Middle East conflict in late February this year, concerns about secondary inflation triggered by soaring global energy prices have been the core logic prompting major central banks, led by the Federal Reserve, to maintain a hawkish monetary policy stance. As a result, the holding cost of non-yielding assets like gold has remained high. However, with the expectation of the Strait of Hormuz reopening strengthening, the anticipated easing of imported inflation pressure is leading the market to reduce aggressive bets on further increases in borrowing costs by the Federal Reserve. Currently, the CME FedWatch tool shows that the probability of a 25 basis point rate hike by the Federal Reserve at the December meeting has fallen to nearly 40%.
Capital Flows Under the Interweaving of Core Technical Moving Averages
From the quantitative indicators of technical charts, spot gold has successfully held the 200-day simple moving average near $4,381 per ounce after withstanding previous selling pressure, indicating that the medium-term bullish structure remains strongly constructive. However, for bulls to completely reverse the recent volatile pattern, they must effectively break through the 100-day simple moving average near $4,800 on a daily basis. The daily chart's relative strength index recorded 44, and the Moving Average Convergence Divergence indicator is still running below the zero axis, reflecting that despite strong intraday bullish momentum, the overall market remains in a consolidation phase between key moving averages. If geopolitical negotiations fluctuate in the future, the horizontal support area near $4,500 will face another technical test from the bears.
