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

Trump’s speech stirs global commodities markets.

Speech Content

Trump self-declares: Achieved “overwhelming victory” in Iran conflict, will launch extremely fierce strikes in the next two to three weeks

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 up, and international gold prices steadily climbed to the $4,800 mark this week.

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 control capabilities. As Trump declared that “extremely fierce strikes on Iran will occur in the next two to three weeks,” this commodities game dominated by geopolitical tensions may continue to exhibit high volatility risks.

Full video | Trump delivers nationwide speech: Achieved decisive victory in Iran conflict

Gold as a safe haven shifts, bulls and bears fiercely contest

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

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

“This morning’s abnormal movement in the gold market is not simply a technical correction,” said a trader. He noted that gold prices just recaptured the $4,800 level, then “plunged from a high platform” within minutes after Trump’s speech, reflecting the current market’s fragility and speculative nature. Both bullish and bearish funds are showing rapid in-and-out trends, with gold volatility significantly amplified.

Dongwu Securities analysis indicates that the current geopolitical risk pricing shows a clear “pulsed” characteristic: news stimuli trigger sharp rises, while expectations being fulfilled or reversed cause 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 positions have sharply increased intraday fluctuations.

Huatai Securities judges 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 similar macro scenario can be referenced to the 1973-1975 oil crisis, during which gold experienced two declines and two rises, with risk aversion and liquidity squeezes caused by economic recession being the main reasons for gold’s fall.

Regarding the future of gold prices, institutional views are notably divided. Copper Crown Gold Source 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 conclude that the correction in precious metals has ended, and the gold-silver ratio is expected to further recover.

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

Additionally, institutions have simulated the subsequent trend of the conflict, suggesting that even if the geopolitical event ends, it may not necessarily be a purely negative signal 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, the geopolitical safe-haven buying that supported gold during the war might weaken; but on the other hand, if oil prices fall and inflation pressures ease, market expectations for 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 “directionally clear and with sufficient momentum.” On April 2, Brent crude oil broke through $106 per barrel, rising 4.78% intraday.

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

Roberto Rennie, head of commodities research at Westpac Banking Corporation, analyzed: “Trump’s speech did not change the fundamental reality— the Strait has been effectively closed for a month, and oil flows remain severely restricted. disruptions could still occur in the coming weeks or longer.” He added that Brent crude is expected to trade between $95 and $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. For countries that rely on the Strait for 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 consensus 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. This is because the market has already priced in higher geopolitical risk premiums for the Middle East.

Copper Crown Gold Source 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 oil 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 oil tankers, adjusting routes, restoring capacity, and restarting refineries—will take a long recovery cycle. Although geopolitical tensions have shown signs of “cooling,” this is likely just verbal easing, with substantial disagreements still unresolved and high uncertainty.

Watch “Trump’s rhythm,” beware of tail risks

In the face of current market volatility driven by geopolitics, many institutions believe that global asset pricing logic has shifted and have proposed new strategies.

Dongwu Securities mentioned in its 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’s speeches. The firm suggests investors wait for clearer developments before making further investment decisions.

Shenwan Hongyuan Futures recommends risk hedging: if peace talks make no real progress or conflicts unexpectedly escalate in the coming weeks, oil prices could spike again. Investors should closely monitor US-Iran diplomatic feedback and US military movements; 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 two core themes for global investors, with tail risks of high volatility also to be watched.

Huatai Securities emphasizes that managing investment rhythm during risk events is crucial. The report notes 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, near a 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 Oriental Horizon Asset Management’s Asia Research Institute, advises investors to distinguish between short-term trading and long-term allocation. In the short term, geopolitical conflict evolution is 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 structural geopolitical risks, diversifying into Europe and emerging markets to offset U.S. retreat impacts, and expanding into AI and energy transition sectors.

(This article is from Yicai)