The spot price of gold in London has seen its center of gravity decline for three consecutive weeks, continuing its downward trend at the start of Monday with an intraday drop of up to 3%. Global macroeconomic conditions and geopolitical tensions are creating a dual shock. Rising oil prices are reigniting global inflation expectations. Last week, the Federal Reserve's March interest rate decision maintained current rate levels, with the ECB, BOE, and BOJ also holding their previous rates, putting pressure on gold's performance. On the geopolitical front, there are no immediate signals of a short-term ceasefire. The US has given Iran a 48-hour ultimatum to open the Strait of Hormuz, threatening to destroy its power plants, while Iranian media reports that officials have proposed six conditions for a truce.

Last week, the Federal Reserve announced its March interest rate decision, keeping the federal funds rate unchanged for the seventh consecutive time. However, the dot plot indicated that expectations for rate cuts in 2026 have been reduced from two cuts forecast in December to just one, with the timing of the first cut pushed back to the end of the year. In his press conference, Chair Powell acknowledged that "the process of bringing inflation down has stalled," emphasizing that tariffs and rising oil prices are creating combined pressure and gradually transmitting to core inflation. He noted that cooling in goods inflation may not occur until at least mid-year, a tone interpreted by the market as hawkish. On the economic data front, February housing starts fell sharply by 11.2% month-over-month, significantly worse than expected, indicating that high interest rates are once again suppressing the real estate sector. However, the March Philadelphia Fed Manufacturing Index surged to 23.1, hitting a two-year high, suggesting resilience in the manufacturing industry.

Geopolitically, US-Iran tensions continue to escalate, with navigation issues in the Strait of Hormuz becoming a market focus. Iran has stated it will not exercise restraint if its infrastructure is attacked again, while US forces might seize islands to force Iran to open the strait.

The market has largely digested the Fed's hawkish stance. Investors will now focus on future US inflation trends. If inflation expectations rise significantly, it would reinforce the hawkish logic of the dot plot, potentially triggering a second round of adjustments to rate expectations. More importantly, the market will continue to concentrate on US-Iran conflicts. The military standoff in the Strait of Hormuz is escalating towards a "pre-conflict" stage, and whether the US deploys ground troops will become a new focal point. The current prominence of high oil prices presents a dilemma for the Fed, balancing between "fighting inflation" and "preventing recession." While volatility in US financial markets could raise liquidity concerns, potentially suppressing gold prices again, a prolonged US-Iran conflict could reignite gold's dual attributes as a safe-haven and inflation hedge. Therefore, we are not pessimistic about gold's future price. The premium for geopolitical risk is expected to gradually materialize later. Strategically, a buy-on-dips and hold approach is recommended, especially after rapid releases of short-selling sentiment, which provide better buying opportunities for investors. Silver, platinum, and palladium are currently moving in tandem with gold, making trading more difficult. Gold's role as the "ballast" of precious metals is significant. Monitor when gold returns to an upward trajectory and wait for the right moment to act.