A week filled with war news and central bank decisions is drawing to a close, and the conclusion is clear: the Middle East conflict is escalating, and no one knows what the right monetary policy response is.

Last week remained highly volatile, with financial markets influenced by headlines related to the war with Iran and sharp fluctuations in energy prices. Attacks on energy infrastructure in the Middle East have exacerbated the conflict, prolonging the negative supply shock facing the global economy. Consequently, the European two-year swap rate rose from 2.60% to 2.82%, TTF natural gas prices surged from €50 per megawatt-hour last week to €62, and oil prices rose to nearly $100. As the war continues, the negative impact on demand intensifies, and stock markets decline. Markets are expected to continue reacting to headlines related to the war with Iran, emphasizing that even after the war ends, the damage to energy infrastructure will prolong the impact on the global economy.

Amid high volatility and the backdrop of the war with Iran, major central banks around the world held meetings this week. The US Federal Reserve, as expected, maintained its target interest rate range at 3.5-3.75%. Chairman Powell provided little forward guidance and seemed more focused on inflation than downside economic risks. The median "bitmap" remains unchanged, but the distribution tilts towards later rate cuts. Market reaction is slightly hawkish, currently pricing in only a 5 basis point rate cut this year, while expecting one cut each in June and September.

The European Central Bank (ECB) also kept its key policy rate unchanged, with the deposit facility rate remaining at 2.00%, in line with expectations. ECB President Lagarde gave a calm and balanced assessment of rising energy prices, suggesting the ECB has no intention of rushing to raise rates. The market currently prices in a 75 basis point rate cut this year.

In contrast to the ECB and the Federal Reserve, the Bank of England delivered a significant hawkish surprise, with all members voting to maintain the interest rate at 3.75%, whereas previously two members were expected to still support a rate cut. Communication was also hawkish, emphasizing the risk of a double-dip inflation effect potentially triggered by rising energy prices. Therefore, the market currently prices in three rate cuts by the Bank of England this year.

In Japan, the Bank of Japan, as expected, kept the interest rate at 0.75%, without releasing any new information that would affect market pricing.

Last Week's Market Performance Review:

The situation in the Middle East continued to deteriorate, and global financial markets faced renewed pressure last week. With no signs of easing in the conflict between the US and Israel and Iran, investor concerns about energy supply disruptions, soaring oil prices, and resurgence of inflation quickly intensified, causing a sharp decline in all three major US stock indexes. On Friday, US stocks fell across the board, with the decline intensifying significantly in the final minutes of trading. The Dow Jones Industrial Average fell 443.96 points, or 0.96%, to 45,577.47; the S&P 500 fell 1.51% to 6,506.48; and the Nasdaq Composite fell 2.01% to 21,647.61. The Russell 2000 index, representing small-cap stocks, fell more than 2% and officially entered correction territory, meaning it has fallen more than 10% from its previous high. Meanwhile, the Dow and Nasdaq are also nearing the edge of correction.

Last week, conventionally, escalating conflict should have been beneficial for gold; however, this time, the market gave the exact opposite answer. As the war in Iran disrupted global energy flows, oil prices soared, and inflation expectations reignited, gold suffered its worst weekly performance since 1983. For investors, this wasn't just a price drop, but a sharp shift in market pricing logic. Gold fell a cumulative $525.56, a 10.47% decline, marking its largest weekly drop since 1983. Since the outbreak of the war, gold prices have fallen by more than 14%.

Last week, with the ongoing conflict in Iran and high energy prices, the market grew increasingly concerned about renewed inflationary pressures, forcing major central banks to pause their easing programs and adopt a longer-term wait-and-see approach. Affected by this, silver has recently suffered a sharp decline of over 18.0%, further intensifying bearish sentiment. If the Middle East conflict continues to drag on and energy infrastructure suffers further damage, gold may face further pain in the short term, even risking a pullback to the lower end of the $60 range.

The US dollar has just reminded the market that trends are rarely linear. After two consecutive weeks of gains, the dollar reversed sharply, with the dollar index firmly above 100.00 before briefly testing the 98.98 level below 99.00 over the weekend. At first glance, this movement seems somewhat unusual; US Treasury yields are rising at both the short and mid-range of the curve, especially after the Federal Reserve meeting. Normally, such interest rate dynamics would support the dollar, not drag it down.

The euro managed to accelerate against the dollar, rebounding from earlier lows and returning to the 1.1560 area on Friday, giving back some of the gains driven by the European Central Bank on Thursday. Meanwhile, the dollar showed a clear upward trend, supported by cautious sentiment in global markets and ongoing geopolitical tensions. The dollar/yen pair rebounded in Asian trading on Friday, regaining the 159.00 level, after falling 1.25% on Thursday, a day dominated by a broad yen strengthening. The pair had risen to near 160.00 earlier in the week but subsequently retreated sharply, with Thursday's large bearish candlestick erasing most of the gains accumulated over the past five trading days.

The pound fell against the dollar on Friday, relinquishing part of Thursday's strong gains and dropping to 1.3340. Oil prices surged, boosted by the Federal Reserve outlook. The dollar was supported by weakening risk appetite, making it difficult for the pound to gain a foothold as investors digested the latest developments in the Middle East crisis. The Australian dollar hovered around 0.7030 against the US dollar. The Reserve Bank of Australia raised the official cash rate by 25 basis points to 4.10% at its March meeting on Tuesday. Despite support from domestic factors in Australia, a return of safe-haven demand put pressure on the currency pair.

US crude oil traded around $97.50 per barrel. Oil prices rose more than 9% in the latter half of last week, hitting a near four-year high, as Iran intensified its attacks on oil and transportation facilities in the Middle East, and its new supreme leader vowed to continue blocking the key Strait of Hormuz. The International Energy Agency warned that the war is causing the worst oil supply disruption in global market history, with Gulf states in the Middle East cutting crude oil production by at least 10 million barrels per day, equivalent to nearly 10% of global demand. The previously approved release of a record 400 million barrels of strategic reserves is only equivalent to about 25 days of disruption.

After three consecutive days of declines, Bitcoin attempted to regain the $70,000 mark last week. Iranian attacks on multiple energy facilities in the Middle East pushed oil prices close to $120, but prices retreated as Israel indicated the war might end sooner than expected, leading to a recovery in risk appetite. Bitcoin rose 1.16% to around $70,735. It had briefly fallen below $70,000, hitting a low of $68,814.4 during the session, as investors assessed the impact of a series of central bank decisions and the escalating tensions in the Middle East. Bitcoin was trading above $74,000 on Wednesday, having earlier this week approached $76,000.

The yield on the 10-year U.S. Treasury note rose about 10 basis points on Friday to 4.37%, its highest level since July 2025, as investors continued to assess the impact of the war with Iran on inflation and brace for a more hawkish tone from the Federal Reserve. Meanwhile, the yield on the 2-year Treasury note, which is more sensitive to short-term Fed policy expectations, rose nearly 10 basis points to 3.9%. Unsettling new developments have emerged in the U.S. bond market, with some investors even comparing it to the situation before the 2008 financial crisis. Market concerns that the Middle East war could escalate into a full-blown energy crisis have led to bond yields moving inversely to prices, rising when bonds are sold off.

Market Outlook for This Week: This week (March 23-27), global markets will face a crucial window of data releases intertwined with geopolitical tensions. A series of core economic data and major events will be released. From inflation and PMI data to central bank policy statements, from the G7 finance ministers' meeting to new technology product launches, every development could trigger significant market volatility. Coupled with the ongoing evolution of the U.S.-Iran situation, investors need to accurately seize opportunities and manage risks. At the start of this week, the US, UK, France, Germany, and the Eurozone will simultaneously release their SPGI manufacturing PMIs, which will directly impact the valuation center of global equity markets. It is crucial to note that some countries' PMIs may show better-than-expected performance, but this may be driven by rising costs rather than improved demand. Furthermore, the occasional surge in the defense industry could distort the data and fail to accurately reflect the true state of the economy.

Before the weekend, the G7 finance ministers will hold a meeting, expected to focus on soaring oil prices and energy security, discussing measures such as jointly releasing emergency oil reserves. Meanwhile, Federal Reserve Vice Chairman Jefferson will deliver a speech.

Regarding risks this week:

Geopolitical and data variables require close attention.

In addition to core economic data, investors should pay attention to five potential risks:

First, the continued escalation of the US-Iran situation may disrupt Middle East energy supplies, pushing up oil prices and risk aversion, which would benefit safe-haven assets such as gold and the US dollar.

Second, speeches by central bank officials such as Lagarde and Jefferson that signal a policy shift could quickly correct market expectations, causing short-term sharp fluctuations in currencies such as the euro and the US dollar.

Third, unexpected deviations in PMI and inflation data from multiple countries could lead to misjudgments of economic fundamentals by the market, exacerbating asset price volatility.

Fourth, if the G7 finance ministers reach a major consensus on energy policy, it could have a temporary impact on the oil market.

Fifth, the switch to European daylight saving time may cause short-term trading disruptions, requiring vigilance against pricing deviations caused by liquidity fluctuations.

This Week's Conclusion:

The market is about to face another week where the Middle East situation could change dramatically. Investors are unlikely to significantly increase their positions before the start of this week, thus last week ended cautiously, with only a glimmer of hope that coordinated action by multiple countries could ease tensions around the Strait of Hormuz. More realistically, oil and gas prices are likely to remain skewed upwards, with high volatility leading to significant two-way price swings. Uncertainty will continue to keep market participants on edge.

The market believes China is relatively less affected by the Middle East conflict because of its energy reserves and significant investment in alternative energy – even in the worst-case scenario, it can rely on coal as a safety net. However, China also faces its own challenges, such as an aging population and a sluggish real estate market.

Gulf states are urging the US: Without crippling Iran, there will be no peace in the Strait of Hormuz.

The Gulf states are facing a complex strategic dilemma: while they haven't actively called for a US war against Iran, given Iran's missile and drone attacks on six Gulf states and its blockade of the Strait of Hormuz, they are now urging the US not to "give up halfway" and to thoroughly weaken Iran's offensive weapons capabilities to avoid facing the long-term threat from Tehran alone in the future. Energy risks are rising, and oil prices continue to be inflated by risk premiums.

Meanwhile, the US is pressuring Gulf states to directly intervene in a conflict to demonstrate regional unity. The Gulf states, in turn, have drawn a clear red line: Saudi Arabia may be forced to retaliate if Iran attacks major oil facilities or desalination plants. At the heart of this game lies the Gulf states' desire to permanently dismantle Iran's "Strait of Hormuz" blockade through US intervention, while simultaneously fearing being drawn into an uncontrollable full-scale war.

The Gulf states are not seeking war, but are concerned about a potential US withdrawal and are urging a thorough weakening of Iran.

While the Gulf Arab states have not actively requested US intervention against Iran, many are now urging Washington not to back down prematurely, lest Iran retain any significant offensive weapons capabilities, continuing to threaten the Gulf region's oil lifeline and the economies of the Gulf states that depend on it.

If Iran retains capabilities such as missiles, drones, and proxy networks, any future escalation of tensions could be used to control the Strait of Hormuz and global energy supplies.

Tehran's Missile and Drone Attacks on Six Gulf States Disrupt Strait of Hormuz Shipping

Iran has launched missile and drone attacks on airports, ports, oil facilities, and commercial centers in six Gulf states, severely disrupting shipping in the Strait of Hormuz. These attacks have heightened concerns among Gulf states that unless Iran is significantly weakened, it will continue to exert pressure on the entire region.

The president of the Gulf Studies Center stated bluntly, "If the United States withdraws before its mission is complete, we will have to face Iran alone."

Combating Imminent Threats with Fear of Involvement in a US-Israel-led War

Meanwhile, Washington is pressuring Gulf states to join the war. Diplomatic sources revealed that Trump hopes to demonstrate regional support for military action to enhance international legitimacy and garner domestic support in the United States.

However, the Gulf states face a strategic dilemma: dealing with the imminent threat of Iranian attacks while weighing the greater risks of being drawn into a US-Israel-led war. They are generally adopting a cautious and restrained strategy: defending sovereignty and drawing red lines, but avoiding full involvement in a war that they neither initiated nor can control. If Iran crosses the red line and attacks oil facilities or desalination plants, Saudi Arabia may be forced to retaliate. The Gulf states have clearly defined the red line: if Iran directly attacks major oil facilities or desalination plants, Saudi Arabia may be forced to retaliate.

Iran has demonstrated its ability to block the Strait of Hormuz, a danger that will persist if left unaddressed. Saudi Arabia and other countries are unwilling to see Iran retain this "nuclear option"-like deterrent capability, preferring to support the US in thoroughly weakening Iran rather than facing repeated threats alone in the future.

The danger will persist if Iran's ability to block the Strait of Hormuz is not eliminated.

Iran's ability to block the Strait of Hormuz is considered the biggest long-term threat in the region. Gulf states fear that even if the current conflict ends, as long as Iran retains missiles, drones, and a network of proxies, it can restart its threat to energy lifelines at any time.

Completely weakening Iran's offensive capabilities has become a core demand of the Gulf states, not simply ending the current war. They urge the US not to "withdraw halfway," but to complete its strategic objectives and avoid endless future troubles.

The US-Gulf rivalry intensifies, with the complete weakening of Iran becoming a core demand of Gulf states.

The current US-Gulf rivalry is escalating: Trump is pressuring allies to join the war, while Gulf states are urging the US not to back down prematurely. Gulf states are unwilling to face the long-term threat from Iran alone, but they also fear being drawn into a larger-scale war.

Completely weakening Iran's offensive capabilities has become a consensus, but the path to achieving this is fraught with risks: excessive US action could trigger extreme Iranian retaliation; premature withdrawal would leave Gulf states under long-term threat. In the short term, restoring navigation through the Strait of Hormuz and de-escalating the conflict remain primary goals, while in the medium to long term, completely weakening Iran's capabilities will become a new focus of regional security.

Conclusion:

Gulf states have not actively requested the US to wage war against Iran, but they are now urging Washington not to withdraw prematurely, lest Iran retain significant offensive weapons capabilities and continue to threaten the Strait of Hormuz and the region's energy lifeline. Iranian missiles and drones have already attacked airports, ports, oil facilities, and commercial centers in the six Gulf states, disrupting shipping in the strait.

Gulf states face a strategic dilemma: they must address the imminent threat while fearing involvement in a US-led war. The red line is clear: if Iran attacks major oil facilities or desalination plants, Saudi Arabia may be forced to retaliate. The danger will persist long-term unless Iran's ability to blockade the Strait of Hormuz is eliminated.

The Gulf War intensifies: Trump pressures for war, while Gulf states demand a complete weakening of Iran. Investors should be wary of the risk of a protracted conflict, high oil price volatility, continued energy supply disruptions, and escalating regional retaliation. Pay attention to the resumption of air traffic through the Strait of Hormuz and signals from US-Iran negotiations.

Dollar Safe-Haven Demand Sweeps the Currency Market: Global Central Banks Caught in Policy Maze; Yen Intervention Triggered; Euro Collapses; Pound Sterling Faces Even Greater Challenges?

The dollar index rebounded before the end of last week, closing at 99.50, with a cumulative weekly gain of 1.67%. The core driver of this dollar strength lies in its safe-haven asset attributes. As President Trump vowed a "fierce strike" against Iran, investors have been reducing their cross-border risk exposure, turning to the US for protection.

The Dollar's Strength is Not an Isolated Event

However, the dollar's strength is not an isolated event; it reflects a significant divergence among major economies due to varying energy dependence. The Eurozone and Japan, heavily reliant on oil imports, have become the hardest hit by this energy crisis.

The euro fell against the dollar, briefly hitting a seven-month low of $1.1410. The market is selling off currencies of net energy importers. If oil prices remain high, it will severely impact the economies of Japan and the Eurozone, while the impact on the US, a net exporter of crude oil, will be relatively smaller. However, the market also faces two-way risks: if geopolitical tensions ease and negotiations progress, risk aversion could quickly subside.

Furthermore, the continued depreciation of the yen has triggered market concerns about intervention. The dollar rose to 159.75 against the yen on Friday, a new high since July 2024. Japanese Finance Minister Satsuki Katayama has warned that Japan is prepared to take necessary measures to deal with sharp fluctuations in the foreign exchange market. Analysts believe that the weak yen will further increase already high import bills, increasing pressure on the authorities to intervene.

Inflationary Pressures and a Policy Shift by the Bank of Japan

The Middle East conflict has not only disrupted the foreign exchange market but may also be a catalyst for a shift in the monetary policies of major central banks, with the Bank of Japan's actions being particularly noteworthy. The supply shock caused by the war is exacerbating inflation risks, which could prompt the central bank to accelerate its hawkish policy process, raising interest rates again as early as April.

This is a stark contrast to the Bank of Japan's past operational logic. In the past, the central bank typically ignored the impact of rising oil prices on inflation, prioritizing support for a weak economy. However, with the potential inflation rate approaching the 2% target, coupled with rising import costs due to a weaker yen, inflation expectations among businesses and households have risen sharply. Bank of Japan Governor Kazuo Ueda has warned that while conflict could damage the economy, it is more likely to push up potential inflation, a risk that must be guarded against.

Although the market widely expects the Bank of Japan's policy meeting to keep interest rates unchanged, Governor Ueda is likely to reiterate the central bank's determination to continue raising rates at the post-meeting press conference. The Bank of Japan's message will emphasize maintaining the "policy normalization path" while assessing the uncertainty brought about by the war. Former Bank of Japan official Seiji Kameda also pointed out that the central bank has "fallen behind" in addressing inflationary pressures in the face of rising oil prices and a weaker yen, and the risk of policy lag is increasing.

The Fed's Double Test: Interest Rate Outlook and the Fog of War

In the coming week, global investors will focus on the United States, as the Federal Reserve holds its policy meeting amidst the smoke of conflict in the Middle East. Since the outbreak of the war, soaring oil prices and their impact on inflation have complicated expectations for interest rate cuts this year. Markets are eagerly awaiting clear signals about the future path of interest rates from Wednesday's latest economic projections and Chairman Powell's remarks.

The Federal Reserve will maintain stable interest rates for the second consecutive time. However, a new variable brought about by the war—the energy shock—is forcing policymakers to reassess its impact on inflation and economic growth. Investors' expectations for rate cuts have been significantly lowered due to concerns that soaring energy prices will again push up prices. Market bets on rate cuts before the end of the year have now fallen from two before the war to less than one.

High energy prices will only keep the Fed on hold for a longer period. Furthermore, this is Powell's penultimate meeting before his term expires in May. The future policy path remains uncertain until Trump's nominee for the new chairman is expected to take over the central bank. News related to Iran will continue to dominate the market, and investors are anxiously awaiting further clarity on the timing of the US exit strategy.

The Bank of England's Stagflation Dilemma

The Bank of England is also facing a similar thorny predicament, but the situation is more severe: the risk of stagflation is looming. On the one hand, high energy prices kept January's inflation rate at 3.0%, well above the 2% target, typically requiring central banks to raise interest rates to curb price increases. On the other hand, the latest data shows that UK GDP remained flat month-on-month in January, indicating weak economic growth, which points to the need for interest rate cuts to boost the economy.

This prospect of "stagflation," with high inflation and weak growth coexisting, has left policymakers in a dilemma before making interest rate decisions. Market expectations have shifted dramatically: pre-war market pricing reflected an 83% probability of a rate cut, but now it has completely shifted to the expectation of stable interest rates, with some even anticipating a rate hike before the end of the year (with a 63% probability). This shift in the money market has directly pushed up UK government bond yields, with the 10-year yield hitting a six-and-a-half-month high.

In the worst-case scenario (oil prices rising to $140), UK inflation could exceed 5%, forcing the central bank to raise interest rates, potentially pushing the UK economy into a mild recession. The Bank of England's Monetary Policy Committee is facing increasingly difficult trade-offs, and its policy focus may shift from buffering downside risks to combating inflation, at least until the dust settles on the Iran conflict.

European Central Bank: A Dramatically Different Response

Faced with the threat of inflation triggered by a new round of war, the European Central Bank (ECB) is well aware that the situation is fundamentally different from that of the 2022 Russia-Ukraine conflict, and that it is in a more advantageous position to respond. While soaring energy costs have once again fueled market bets on interest rate hikes, officials have hinted that no action will be taken in policy decisions, as the current macroeconomic context and policy mix have fundamentally changed.

First, the starting point for inflation and the energy mix are different. The current inflation rate in the Eurozone is 1.9%, slightly below the 2% target and far below the 5.1% at the beginning of 2022. At the same time, due to a more diversified energy mix, gas and electricity prices in countries like Germany are only a fraction of those during the worst periods of inflation, which will largely curb inflationary pressures. Second, the monetary policy stance is different. In early 2022, deposit rates were still negative (-0.5%), reflecting an ultra-loose policy aimed at stimulating inflation; currently, the 2% benchmark interest rate is considered neutral, meaning that minor adjustments can curb price increases.

Conclusion:

Overall, the labor market is not as overheated as it was then, and the expansionary nature of fiscal policies in various countries has also weakened. European Central Bank officials emphasized that the duration of the war is a key variable, but the central bank has learned from past mistakes. Slovak Central Bank Governor Peter Kazimir stated that the central bank can "respond more quickly" if necessary and must remain flexible. Analysts generally believe that despite similarities, this round of shocks differs from that of 2022, and the ECB has no reason to deviate from its "see-through" strategy, at least for now.

Power Vacuum Holds the Strait of Hormuz's Key; Where Will Oil and Gold Prices Go?

The deaths of high-ranking Iranian officials have created a power vacuum; ultimately, only the one who controls the Strait of Hormuz will declare victory, leading to soaring oil prices and sluggish gold prices? A high-stakes gamble on inflation, interest rates, and the right to survival is just beginning.

Israeli Defense Minister Katz confirmed the death of Mohammad Larijani, secretary of Iran's Supreme National Security Council.

Following the assassination of Iran's Supreme Leader Ayatollah Khamenei, Larijani filled the power vacuum, becoming the de facto wartime administrative leader of Iran. He was responsible for coordinating armed forces, strategic decision-making, and foreign communication, and was a key figure in maintaining political stability and balancing radical forces in Iran.

His death directly led to a power vacuum in Iran's decision-making body, a potential break in the command structure, and a second power reshuffle within the country. The probability of hardliners gaining power in the military has increased significantly, and the risk of further escalation of the Middle East conflict has risen sharply. This directly caused a short-term decline in both crude oil and gold prices during trading.

Meanwhile, US President Trump sought to postpone his visit to China for "about a month" to focus on the war with Iran. Equity markets that had already bet on the positive effects of the US-China talks experienced a general correction.

Gold: Strong Safe-Haven Support; Hawkish Fed Expectations Suppress Gains

Driven by the continued deterioration of the situation in Iran, market demand for safe-haven assets has surged, providing strong support for gold prices. International gold prices continued to fluctuate at low levels on Tuesday, with spot gold unchanged at $5,005.32 per ounce. However, investors remained cautious ahead of the Federal Reserve's monetary policy decision, and expectations of interest rate cuts continued to cool in a high-inflation environment, significantly limiting gold's upside potential.

Gold fell more than 10% on Friday to $4,477 per ounce, heading towards its biggest weekly drop since 1983, as escalating tensions in the Middle East caused energy prices to surge and dampened hopes for a near-term interest rate cut. Prices declined further after news broke that the Pentagon had deployed three warships and thousands of Marines, with traders setting the probability of a Fed rate hike in October at 50% due to heightened concerns about persistent inflation.

As a non-interest-bearing asset, gold's opportunity cost increases during periods of high interest rates, exhibiting a volatile pattern of "safe-haven support and interest rate cap."

Crude Oil: Energy Facilities Attacked; Oil Prices Surge to New High

Iran launched a new round of attacks on key energy infrastructure in the UAE, with fires breaking out at the Shah gas field and the Fujairah oil industrial zone, and oil tankers attacked near the Strait of Hormuz, bringing this strategic shipping route, carrying about one-fifth of the world's oil shipments, to a near standstill.

Driven by expectations of supply disruptions, international oil prices surged: WTI crude oil rose 3.6% to $96.95 per barrel.

Since the outbreak of the conflict, oil prices have risen by a cumulative 40%, reaching a new high since 2022, becoming a core variable driving global inflation.

Meanwhile, the President of the European Council stated that the EU needs to prepare for dialogue with Russia. While the EU's primary task at this stage is to increase economic pressure on Russia and support Ukraine through various means, he hinted that if global energy prices continue to remain high, it needs to be prepared to engage in dialogue with Russia.

Gold and Oil Price Linkage: Rising Inflation Suppresses Interest Rate Cuts, Yields Constrain Gold Prices

Crude oil and gold exhibit a clear correlation between inflation, interest rates, and yields: Soaring oil prices rapidly push up global inflation expectations, leading to a significant downward revision of market expectations for Federal Reserve interest rate cuts, and consequently, a rise in US Treasury yields.

While gold benefits from geopolitical safe-haven demand, as a non-interest-bearing asset, it is highly sensitive to rising yields. Increased holding costs directly suppress its price increases, forming the core trading logic of "surge in oil prices → rising inflation → upward revision of interest rate expectations → downward pressure on gold."

Conclusion:

The market is currently still engaged in a game of strategy surrounding the Strait of Hormuz. Regardless of whether the US ultimately withdraws or declares victory, the side that controls the Strait of Hormuz will be the ultimate winner.

Although Iran's top leader has died, Iran retains control of the Strait of Hormuz. From weapons production and food and drinking water to ethnic resistance against aggression, Iran demonstrates the potential for a protracted war, which is itself part of its strategic plan. Therefore, the Strait of Hormuz will likely remain closed, further pushing up oil prices. Meanwhile, as long as US Treasury yields continue to rise, gold will likely maintain its weak and volatile trend.

Furthermore, the market awaits to see whether this new power transition will lead to regime collapse due to internal power struggles or the rise of a new leader who creates new heroes.

Overview of Important Overseas Economic Events and Matters This Week:

Monday (March 23): US January Construction Spending (MoM) (%); Eurozone March Consumer Confidence Index (Preliminary); US March New York Fed Manufacturing Index; US February Industrial Production (MoM) (%); US January Seasonally Adjusted New Home Sales (Annualized, in thousands)

Tuesday (March 24): Japan February National CPI (YoY) (%); Eurozone March SPGI Manufacturing PMI (Preliminary); UK March SPGI Services PMI (Preliminary); UK March CBI Retail Sales Balance; US March SPGI Manufacturing PMI (Preliminary); Reserve Bank of New Zealand Governor Brehman Speaks

Wednesday (March 25): Australia February Bureau of Statistics CPI (YoY - Seasonally Adjusted) (%); UK February CPI (YoY) (%); UK February Retail Price Index (YoY) (%); UK February Unadjusted Input PPI (YoY) (%); US February Wholesale Inventories (MoM) (Preliminary) (%); US EIA Weekly Crude Oil Imports (in thousands of barrels) for the week ending March 20;

Thursday (March 26): Germany's April GfK Consumer Confidence Index; Eurozone's February Seasonally Adjusted M3 Money Supply Annual Rate (%); US Initial Jobless Claims for the week ending March 21 (in thousands); Speech by RBA Assistant Governor Kent

Friday (March 27): UK March GfK Consumer Confidence Index; UK February Seasonally Adjusted Retail Sales (MoM) (%); Eurozone February ECB 1-Year CPI Forecast (%); US March University of Michigan Consumer Sentiment Index Final Reading; Fed Vice Chairman Jefferson Speaks

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