Source: Huitong Finance
On Tuesday (July 21), during the Asian and European sessions,
spot gold opened with a slight dip and then moved upward unilaterally. The previous article had hinted that gold price not falling despite bearish news could mean a rebound was brewing. Last night, the US-Iran negotiations took a turn, and today, the Asian equity markets staged a strong rebound in resonance, providing an excellent intraday trading opportunity for spot gold.
Currently, gold is trading around 4072, up 1.62%.
US-Iran confrontation is at an impasse, single airstrike strategy reveals clear limitations
The core anchor for global crude oil pricing—the Strait of Hormuz—continues to endure shocks from the US-Iran geopolitical rivalry. Both sides have engaged in mutual airstrikes and remain deadlocked.
Experts have found that relying solely on escalating aerial bombardment to apply pressure has hit an effectiveness ceiling, making it difficult to quickly force Iran to compromise and make concessions.
The US and Iran are both unwilling to yield on dominance over strait shipping; the previous temporary ceasefire agreement has completely collapsed, US military casualties continue to climb, and US retail gasoline prices are rebounding in tandem, causing inflationary pressure that directly drags down the Republican Party’s prospects in the midterm elections. The market continues to question the sustainability of the US’s conflict response strategy.
Even if there are marginal signals of negotiation and easing, the tail risk of a regional full-scale war remains high. Trump publicly stated that if Iran causes further US military casualties, it will pay several times in retaliatory costs.
Numerous Middle East experts from international think tanks have unanimously pointed out that the root cause of this round of escalation lies in the US’s fundamental misconception of Iran’s decision-making logic, as well as its failure to learn from past confrontations.
Both sides hope to break the impasse through increased military confrontation, but the higher the intensity of the conflict, the narrower the room for subsequent diplomatic mediation.
Though the White House repeatedly claims that the door to diplomatic negotiations is always open, and Secretary of State Rubio indicated a willingness to negotiate—citing multiple expressions of intent from Iran—the market only prices in real actions. Iran continues to use missiles and drones to harass commercial vessels in the strait. This waterway handles one-fifth of global crude oil shipments, so supply disruptions are directly transmitted to the bulk commodities
market.
US officials, speaking anonymously, revealed that military strikes against Iran will not cease, while diplomatic channels remain open. However, most geopolitical analysts believe that the current US administration cannot find a stable exit strategy—militarily or diplomatically. The whole response system is chaotic and lacks long-term coherence.
At the same time, multiple defense experts revisiting historical conflicts stated that single-mode airstrikes have natural shortcomings. The US carried out 13,000 strikes over six weeks but still did not force Iran to submit.
Iran preemptively dispersed and concealed ballistic missiles, drones, and other equipment; obvious targets have essentially been depleted, making long-term suppression of its long-range attacks extremely difficult. Large-scale deployment of ground forces would face dual opposition from the American public and Congress, making policy implementation very difficult. The US military is caught in a dilemma.
Bilateral trust has completely collapsed, making diplomatic reconciliation extremely challenging
On the diplomatic front, longstanding trust deficits between the US and Iran are hard to mend, forming a core obstacle to ceasefire talks.
The Trump administration did not pursue substantive negotiations, instead relying on a group of key aides lacking experience in cross-border diplomacy, and outsourcing most mediation efforts to third countries such as Qatar, Pakistan, and Egypt, causing a lack of core traction in negotiations.
The US and Iran are mutually suspicious, with no foundation of trust, bilateral confidence is entirely depleted, and each stage of negotiation faces numerous obstacles, making substantive reconciliation extremely difficult.
However, the market has recently detected several marginal signs of easing, offering faint support for de-escalation.
The US high command showed relative restraint following the attack on American troops in Jordan, refraining from excessive retaliatory actions;
At the same time, Iran proactively released an Iranian-American woman who had long been barred from leaving the country, sending a clear goodwill signal.
Several analysts interpret this series of statements and actions as both sides retaining space to de-escalate and withdraw from the brink.
However, tail risks have not been fully eliminated. The Houthis, backed by Iran within Yemen, have declared a blockade of Saudi maritime shipping. Should this blockade further expand and completely sever the Bab-el-Mandeb Strait, all marginal signals of easing would quickly become irrelevant—exposing the already fragile global energy and economic systems to compounded shock.
Critical shipping lanes severely blocked, crude oil supply chain remains under pressure
With ongoing escalation of geopolitical tensions, chaos in Strait of Hormuz shipping has intensified, and the pressure on the global energy supply chain is increasingly apparent.
According to the latest statistics from maritime agency Signal Group, as of July 15, there were as many as 728 empty and loaded tankers stranded around the Strait of Hormuz. Both the Persian Gulf and Gulf of Oman have seen massive vessel congestion, with prominent navigation blockages and transport disruptions.
Following the further deterioration of US-Iran tensions on July 6, market risk aversion surged, and the proportion of tankers with transparent ownership passing through the strait dropped sharply from 67% during the interim peace agreement to 45%. Many shipowners, seeking to avoid attack risks, have voluntarily turned off their ships’ automatic identification systems and sailed anonymously, dramatically reducing transparency in strait shipping.
Short-term navigation data further reflects extreme market risk aversion: at the start of the week, traffic through the Strait of Hormuz shrank sharply. On Monday, only 4 bulk commodity vessels passed through (UTC+8), down by almost half from 7 the previous day.
Ship tracking data showed that no vessels traversed the Strait of Hormuz within 24 hours.
Furthermore, the ships passing that day were mainly regular chemical and oil product carriers, with no VLCC supertankers or LNG carriers crossing. High-value energy transport basically came to a halt.
With a new blockade threat in the Red Sea’s Bab-el-Mandeb Strait, both of the world’s most critical maritime energy corridors face risk simultaneously. Market concerns about oil supply disruption continue to intensify, forming the core bullish fundamental supporting high oil prices. Institutions have warned: should a conflict result in damage to a fully loaded tanker, international oil prices may experience severe, rapid swings.
Geopolitical risk marginally eased, risk appetite in Asian equity markets rebounded
With geopolitical risks not fully resolved and energy supplies still pressured, market sentiment has seen marginal improvement. Extreme pessimistic risk aversion is cooling, and global risk appetite is reviving steadily, leading to a staged rebound in Asian equities.
The core bearish factor that had previously suppressed markets—expectations of a full-scale US-Iran war and complete blockade of shipping lanes—has weakened. Demand for safety assets has receded, and funds are returning to risk assets.
Asset trends show significant divergence: oil remains strong and gold is weak, dominating market performance
Today, gold staged a significant rebound (UTC+8), but oil prices did not fall significantly. This means the core inflation issue depressing gold prices has not eased; gold’s rebound is more due to a sentimental risk appetite repair than fundamental reasons.
Crude oil prices are sustained by a rigid supply gap, with their core support untouched: long-standing tanker congestion in the Strait of Hormuz, sharply reduced transits, and high-value energy shipments stalled, coupled with potential Bab-el-Mandeb Strait blockades, mean uncertainty over global crude maritime supply remains high. The tight supply-demand balance is hard to overturn, and a persistent geopolitical premium underpins oil prices.
As for gold, its traditional safe-haven function has not benefitted from realized geopolitical risk; instead, it continues to weaken.
The fundamental reason is that high oil prices continue to raise global inflation expectations. The market has simultaneously raised chances of tighter monetary policy in major economies. US real interest rates are rising in volatility, sharply weakening gold’s allure as a non-yielding asset. The market focus is now on “recovery of risk appetite + heightened inflation and rate hike expectations,” not on a systemic flight to safety, meaning gold lacks sustained upward momentum.
Overall, in the short term, there are no signs yet of a complete loss of control in the US-Iran conflict. Solid favorable factors from energy supply and continued market risk-on sentiment mean the oil-strong, gold-weak divergence will persist.
Moving forward, focus on the state of the two main shipping lanes and the US-Iran interactions. If the geopolitical situation suddenly deteriorates and risk appetite retreats quickly, gold might regain its safe-haven rally, while oil prices could see wild, unexpected fluctuations. Technicals: Spot gold has broken above the downtrend line on the daily chart but remains within the downward channel. The focus is whether it can ride the momentum to break through; failure to do so would mean the downtrend continues.
(Spot gold daily chart, source: Yihuitong) At 15:52 (UTC+8), spot gold is quoted at $4072.27/ounce.
Editor: Zhu Henan
