To The Moon

This past weekend was actually the calmest in recent weeks. Markets had expected the U.S. to deploy ground forces to seize Iran’s Kharg Island, but aside from strikes on Iranian steel plants, there was little major action. Overall, it was relatively quiet compared to prior weeks. However, actions of this scale alone by the U.S. and Israel are not enough to resolve the current blockade of the strait. The real turning point will come when the strait is reopened—that’s when a fundamental shift occurs.

At present, the Pentagon appears to be aiming to replicate the rapid success seen during the 1990 Gulf War, hoping to quickly resolve the blockade within one to three months. Whether that is realistic remains to be seen, and only actual deployment will provide answers. But if even U.S. ground forces cannot stabilize the situation, then oil prices may enter an entirely new long-term paradigm. That is the answer the market is waiting for.

$SPDR Gold ETF(GLD)$

1. The 6250 Defense Line: Will the Strait Blockade Trigger Panic Selling?

The so-called “February curse” for U.S. stock indices remains in effect. As the strait blockade situation evolves, markets are likely to test a key support level next week—the 20-month moving average (around 6,250 for the S&P 500). A decisive break below this level could open the door to further downside, potentially triggering panic selling. Investors should stay alert and hedge where necessary.

The next key time window is around May. By then, the effectiveness of any U.S. ground operation against Iran should become clearer, making it a more appropriate time to reassess bottom-fishing opportunities. The market is not focused on day-to-day fluctuations, but rather on whether U.S. ground forces will act—and how effective they will be.

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2. Crude Oil: Is a Second Rally Awaiting a Signal?

After a period of verbal sparring, oil’s upward momentum appears to have cooled slightly. However, technically speaking, oil remains strong—just with high daily volatility. Last Monday, prices pulled back to the 20-day moving average, a typical support level during an uptrend.

If this coincides with news of U.S. ground forces landing on the island, oil could enter another wave of upward volatility. Regardless of whether one participates in this rally, it’s important to recognize that both upward and downward moves in oil are highly volatile. If prices break below the 20-day moving average, the current uptrend would be considered over.

Investors should not expect a prolonged bull market in oil. The real economy cannot sustain persistently high prices. Oil is currently driven by event-based, pulse-like movements. If the U.S. ultimately restores control over the strait, oil prices may mirror the 1990–91 pattern—returning to where they started. Therefore, using technical indicators as a baseline strategy is more straightforward.

Ultimately, oil is waiting on one thing: whether U.S. ground forces will move or not.

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3. Precious Metals and Agricultural Commodities

Gold saw a slight rebound last week, prompting many to consider bottom-fishing. For short-term traders, this may be viable given the large price swings and potential gains. However, medium- to long-term investors should remain cautious.

With the strait blocked, Gulf countries are seeing sharp declines in revenue, and selling gold remains one of the fastest ways to raise cash. Unless this situation changes, it will be difficult for gold prices to stabilize. During the 2008 financial crisis, gold—often seen as a safe-haven asset—still fell by 35%. Applying a similar decline today, a drop below 4,000 to around 3,600 would not be surprising. Investors should be financially prepared for such scenarios, especially since high leverage can amplify losses.

As for agricultural commodities, rising oil prices drive up fertilizer costs and thus increase planting expenses. This logic holds as long as oil continues rising. When oil eventually turns downward, the speculative momentum in commodities is also likely to fade.

Gold is waiting for Gulf countries to stop selling—and that depends on when U.S. ground forces restore order in the strait. Agricultural commodities are waiting on oil—and oil, in turn, depends on U.S. ground forces.

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