In the same geopolitical headline, crude oil is going on a relentless run to the upside, while gold—along with $PAXG —should see an equally sharp drop, falling below the $4,150 mark. The biggest divergence on the screen lies in a cross-market pricing disconnect: energy is being priced for supply and inflation, while precious metals are firmly trapped in the logic of interest rates and the US dollar.
When Brent crude pushes up to $107, inflation expectations quickly feed into the rates side, driving the 10-year US Treasury yield above 5.20% and lifting the US Dollar Index to above 101. Against the backdrop of the market pricing nearly a 70% probability of a rate hike next month, the surge in the holding costs of non-yielding assets directly suppresses the room for a risk-off premium, causing the spot market to continuously breach several key support levels from around $4,400.
Short-term speculative positioning is closely watching rate selloffs, but long-term reserve-type buyers have not exited. Holdings in the September gold ETF are still increasing, and central banks’ net gold purchases in the second quarter have also remained robust growth. Funds on different dimensions are producing markedly different trading rhythms for the same asset.
Next, the key is whether US Treasury yields can loosen from their current high levels. If inflation stickiness continues to force the rates side to stay hawkish, on-chain gold assets are very likely to remain under pressure and trade in a volatile range. If, later on, geopolitical risk premia again overwhelm the cost of holding coins, the pace at which capital flows back is also not to be underestimated.
When Brent crude pushes up to $107, inflation expectations quickly feed into the rates side, driving the 10-year US Treasury yield above 5.20% and lifting the US Dollar Index to above 101. Against the backdrop of the market pricing nearly a 70% probability of a rate hike next month, the surge in the holding costs of non-yielding assets directly suppresses the room for a risk-off premium, causing the spot market to continuously breach several key support levels from around $4,400.
Short-term speculative positioning is closely watching rate selloffs, but long-term reserve-type buyers have not exited. Holdings in the September gold ETF are still increasing, and central banks’ net gold purchases in the second quarter have also remained robust growth. Funds on different dimensions are producing markedly different trading rhythms for the same asset.
Next, the key is whether US Treasury yields can loosen from their current high levels. If inflation stickiness continues to force the rates side to stay hawkish, on-chain gold assets are very likely to remain under pressure and trade in a volatile range. If, later on, geopolitical risk premia again overwhelm the cost of holding coins, the pace at which capital flows back is also not to be underestimated.