Three Iranian tankers were hit, and $XAU only rose 0.06%? $CL rising 0.81% also looks like it barely moved.
The market's first reaction would definitely be "buy gold for safety," but this time that may not be right. The risk to passage in the Persian Gulf and the Strait of Hormuz is indeed building, but look at the chart—both instruments are consolidating on lower volume, which means big money simply does not believe the conflict will escalate to the point of affecting supply.
My view is that in the short term, $CL actually has more upside than $XAU . The pricing anchor for oil is the transport route, not the military strike itself. Since oil prices did not gap up before the U.S. stock market opened, it proves traders are waiting for more concrete blockade action. At this $XAU 4437 level, unless there is a ground counterattack, funds would rather sit in U.S. Treasuries than touch it.
Don't chase the rally; wait for a pullback.
#gold
The market's first reaction would definitely be "buy gold for safety," but this time that may not be right. The risk to passage in the Persian Gulf and the Strait of Hormuz is indeed building, but look at the chart—both instruments are consolidating on lower volume, which means big money simply does not believe the conflict will escalate to the point of affecting supply.
My view is that in the short term, $CL actually has more upside than $XAU . The pricing anchor for oil is the transport route, not the military strike itself. Since oil prices did not gap up before the U.S. stock market opened, it proves traders are waiting for more concrete blockade action. At this $XAU 4437 level, unless there is a ground counterattack, funds would rather sit in U.S. Treasuries than touch it.
Don't chase the rally; wait for a pullback.
#gold