To The Moon

On March 4th, pressured by an exceptionally strong US dollar index, the precious metals market experienced a sharp "roller coaster" movement on Tuesday. FPG Cai Sheng International noted that although a full-scale escalation in the Middle East situation initially pushed gold prices above $5,380, a subsequent surge in the dollar exchange rate triggered large-scale profit-taking in the market. As a stronger US dollar significantly increased the cost of holding safe-haven assets for non-US currency holders, commodities like gold and silver underwent a technical correction intraday. The market is currently in a period of assessing the interplay between the depth of geopolitical conflict and tightening macro liquidity. Geopolitical turbulence has entered an extremely sensitive phase. FPG Cai Sheng International indicated that strikes by US-Israel allied forces on core Iranian targets, followed by retaliatory missile attacks, have elevated regional conflict to a new level. The scope of conflict is not limited to Iranian territory but also involves key shipping chokepoints such as Lebanon and the Strait of Hormuz. Data shows that after hitting its intraday high, spot gold quickly reversed course, closing down 3.9% at $5,115.15 per ounce, while US gold futures also recorded a 3.6% decline. The market suggests that if Iran follows through on threats to blockade the chokepoint responsible for approximately 20% of global oil flow, potential disruptions to energy supply would provide a structural, long-term support for elevated gold prices. Regarding fund flows, institutional investors' safe-haven preferences are showing subtle divergence. FPG Cai Sheng International stated that compared to gold's relative stability, silver and platinum faced more severe selling pressure on Tuesday, with silver falling 6.8% and platinum plunging over 9%. This divergence stems primarily from silver's lower liquidity and its sensitivity to industrial premiums; in the early stages of a risk-aversion environment, funds often tend to concentrate in the most core safe-haven assets (gold and the US dollar). Statistics indicate that sovereign debt expansion and ongoing gold purchases by global central banks had already established a bullish foundation for gold before the conflict erupted, with the geopolitical crisis merely accelerating this trend. In summary, the current adjustment appears more like a valuation correction following the previous rapid price increases. FPG Cai Sheng International believes that as long as the situation in the Middle East shows no substantive signs of easing, the fundamental bullish underpinning for gold, as a hedge against political turmoil and long-term inflation, remains intact. In the short term, investors should be wary of marginal pressure stemming from the US dollar's consolidation at high levels, with gold prices expected to seek a new oscillation axis within the range of $5,250 to $5,300.