Recently, the international financial market has continued to experience volatility under the intense geopolitical game. Safe-haven assets and strategic resources have regained the focus of capital. While Trump released the signal that "the war will soon end", the military actions of the United States and Israel continued to escalate. The news of mines appearing in the Strait of Hormuz exacerbated the risk of channel disruption. Iran's attitude remained tough and it did not release any clear willingness for negotiations. The uncertainty of the situation was high. This complex situation of "military pressure and diplomatic rhetoric happening simultaneously" strengthened the market's concern about the long-term disruption of supply chains and drove funds to continuously flow into assets that can hedge such tail risks. The value of gold as a store of value and a hedge against risks has been further highlighted in the chaos. Its upward elasticity in price shown in the repeated risk sentiment reflects that it has upgraded from a traditional hedge commodity to a "strategic core asset" for countering macroeconomic fluctuations and sovereign credit risks. Currently, the competition for global resources has intensified. Whether it is the upstream minerals or the midstream smelting capacity, their "supply security" has become a more critical pricing factor than cost.
The energy and chemical sectors led by crude oil have frequently witnessed "free-fall" like market fluctuations under the current chaotic situation. The market, following the signals of geopolitical events, diplomatic rhetoric, and the escalation of military strikes, has experienced emotional fluctuations. From the beheading of senior Iranian officials by the US and Israel to the rise of the second son of Ayatollah Khamenei, the assertive hardliners in Iran have adopted an attitude of weaponizing resources to hijack global economic and trade relations. In the short term, President Trump's "won" statement was actually a temporary and tough retreat by the US authorities, in an attempt to prevent Iran from continuously blocking the Strait of Hormuz and threatening the continuous acceleration of the vicious spiral of global economy and trade. However, cases where starting a war is powerless to extinguish the fire abound. The financial market often tends to significantly underestimate the tail risks of the market!
Currently, the United States is exacerbating the situation in the Middle East, causing the price of crude oil to rise to over $120 and $150 per barrel, thereby increasing the probability of global inflation and economic crisis. The risk probability of this situation being suppressed by all parties in the market has been reduced. However, for the premium based on geopolitical factors, it is impossible to reverse the situation and restore it to its original state. For countries around the world, especially the hostile countries of the United States and the so-called disobedient ally countries under the shadow of geopolitical crises, the impact of the Middle East situation on international relations and the financial market will not return to the pre-war state. The overall price of crude oil and petrochemicals will fluctuate up and down, and the overall trend will shift upward more in line with neutral expectations. At the same time, the threat of consecutive explosions in the geopolitical powder keg and the uncontrollable risks of power struggles among major countries have intensified. The funeral bell rings for whom? Peaceful development in the global era! In times of chaos, the domestic region that seeks peace must abandon illusions and be vigilant against potential dangers!
In the long term, gold will maintain its price resilience under the strong demand for hedging geopolitical risks and strengthening asset allocation! Geopolitical conflicts have revealed the vulnerability of the global supply chain, which constitutes the "macro security premium" of strategic risk assets such as gold. The short-term price of gold returning above 5200 US dollars indicates that the market is pricing in long-term structural risks. Silver and platinum-palladium have fluctuated significantly under the influence of gold. These silver and other varieties have large elasticity and high volatility. As a benchmark for speculative games, investors can consider buying gold, copper, aluminum and the energy and chemical sectors at low prices as the core strategic allocation and hold it firmly in the second quarter!
The non-ferrous metals sector continues to navigate between macroeconomic sentiment and industry realities. Aluminum, being directly affected by geopolitical shocks, has the clearest logic. Although some easing signals have been released, the substantial supply gap that Qatar and Bahrain's aluminum industries have already created has not changed. The high spot premiums in many places also confirm that shortages are occurring. After a pullback and confirmation of support, the price of aluminum on the Shanghai Futures Exchange continues to show a strong trend. Copper prices exhibit resilience of "having a rigid cost bottom below and an actual inventory ceiling above". After the marginal easing of macro pressure, prices rebounded rapidly. The long-term contradiction of China's high reliance on copper imports provides support for prices, and the purchasing resilience of the downstream at key price levels also validates the elasticity of demand.
