On March 23, in the East 8 Zone time, the tension between the US and Iran unexpectedly escalated, instantly shattering global risk appetite, first affecting the Asia-Pacific market, which is highly dependent on external demand and capital flows. The South Korean KOSPI index plummeted 6.49% in a single day, while the Nikkei 225 fell sharply as well, with risk sell-offs quickly spreading from the stock market to commodities and interest rate assets. Unlike traditional textbooks, that day’s market saw a rare combination: the stock indices of Japan and South Korea plunged, gold and silver sharply fell, while crude oil and US Treasury yields rose simultaneously. The safe-haven demand triggered by geopolitical conflict intertwined with the pricing of "higher rates for longer," leading to a drastic migration of funds between different assets and raising a key question—under dual pressure, why did traditional safe-haven assets not behave according to the paths remembered by the market.

Stock Market Plunge in Japan and South Korea: Asia Pacific Becomes the First Impact Point

During trading on March 23, the South Korean KOSPI index dropped 375.45 points, a decline of 6.49%, with the most liquid and highest-weight constituents leading the sell-off, displaying a typical "indiscriminate sell-off" characteristic. In Japan, the Nikkei 225 index fell by 1857.04 points, a decrease of 3.48%, as the previously accumulated profit positions were concentrated for realization under the stimulus of geopolitical information, compounded by selling from quantitative and passive funds, amplifying the index's decline.

The Asia-Pacific stock markets are particularly sensitive to this type of geopolitical risk, which is essentially related to their economic structure and capital structure. On one hand, both Japan and South Korea are typical export-oriented economies; any disturbances in global trade expectations or supply chain security will directly discount their future earnings. On the other hand, in the context of global liquidity excess over the past few years, the stock markets of Japan and South Korea have become important venues for overseas capital to seek beta returns, with a high proportion of foreign capital, naturally amplifying the outflow of funds in times of panic. When risk appetite decreases, institutions tend to first retreat from the Asia-Pacific assets characterized by high volatility and maximum elasticity to global economic conditions, regarded as "peripheral markets."

Therefore, when tensions between the US and Iran escalated, the immediate reaction of safe-haven funds was often not to "immediately buy safe assets," but rather to first exit from the most sensitive and easily sold-off high-volatility assets in the Asia-Pacific, flowing back to domestic currency assets or short-duration cash instruments. In this process, the stock markets of Japan and South Korea acted as a "risk release valve," becoming the first point of revaluation risk for global funds in the early stages of a geopolitical event.

Gold and Silver Both Lose Ground: Safe-Haven Myth Shattered in the Face of High Rates

Contrary to the experience intuitions of many investors, on March 23, spot gold not only did not rise but instead fell, briefly dropping below $4250 per ounce, with a daily decrease of about 5%; spot silver touched $62 per ounce, plummeting 8.63%, with long positions continuously getting wiped out, creating a “stampede” downward in the precious metals sector. In traditional narratives, an escalation of geopolitical conflict should benefit safe-haven assets like gold and silver, but this time, price behavior significantly diverged from the narrative.

The key lies in the fact that precious metals are experiencing a “double kill” scenario of geopolitical tension and hawkish expectations from central banks. Justin Low points out that precious metals are facing multiple adverse factors compounded, with a reversal in central bank stance intensifying price pressures. Under the pricing of “higher rates for longer,” the market's optimistic expectations for future rate cuts are being continuously revised, leading to a stronger dollar and rising real yields—both of which are core variables suppressing gold and silver valuations.

In a high-interest environment, the opportunity cost of holding non-yielding precious metals significantly rises, with investors preferring to lock in higher nominal rates and more liquid interest-bearing assets. At the same time, rising real yields imply that "holding bonds can yield a higher inflation-adjusted return", increasing the discount pressure on precious metals. On the derivatives front, when prices fluctuate sharply in a short period, margin requirements rise, and unrealized losses expand, with passive liquidations and additional margin calls overlapping, forcing some levered funds to actively sell gold and silver to free up liquidity. Ultimately, the influx of safe-haven buying was far outpaced by the sell-off scale driven by rate and margin pressures, resulting in precious metals being nominally "sought after for safety" while actually experiencing tangible selling pressure on prices.

Crude Oil Rises Against the Trend: War Premium Ignites Inflation Imagination

In stark contrast to the broad declines in the stock market and precious metals, on March 23, in the energy sector, WTI crude oil futures prices rose by more than $2 in a single day, an increase of about 2%, standing out particularly against the backdrop of overall pressure on risk assets. This rise in oil prices was not merely an emotional trade but rather a quick reassessment of future supply risks and transportation corridor security.

Once geopolitical conflicts involve oil-producing countries or key shipping lanes, the market will quickly reassess the crude oil supply curve: even if actual supply has not decreased, as long as interruption risks and transportation cost expectations rise, futures prices will anticipate potential shocks in advance. For global energy trade that heavily relies on maritime transport and key waterways, the marginal uplift of insurance premiums, rerouting costs, and inventory safety reserves will amplify this "war premium." On the trading level, going long on crude oil has become a direct means for some funds to hedge risks related to the Middle East, thus boosting oil prices at the same time as stock market sell-offs and precious metals losses occurred.

A deeper impact is that rising energy prices rapidly ignited inflation expectations. Energy is a fundamental variable for the CPI and PPI of most economies; rising oil prices not only increase production costs but also pass through to end consumer prices through transport, logistics, and other links. As a result, the market is forced to re-evaluate the inflation trajectory over the next several quarters, further correcting expectations for central bank monetary policy: if energy-driven inflation resurfaces, the central bank's space for rate cut timing and magnitude will be further constrained. This chain of “oil price rise—inflation expectations surge—easing expectations cool” leads to crude oil prices becoming not just a local variable in the energy sector, but a key thread influencing global asset pricing.

US Treasury Yields Rise: Safe-Haven Funds Opt for “High-Yield Safety Cushion”

In this global repricing triggered by geopolitical conflict, the yield on the US ten-year Treasury bonds rose against the trend to 4.423%, reaching a new high since July 2025. On the surface, this contradicts the traditional view that "safe-haven buying of US Treasuries lowers yields", but under the macro narrative of "higher rates for longer", the weighing of funds has quietly changed.

The dominant logic in the current market is: even if short-term prices may still fluctuate, locking in a relatively high nominal rate in itself is a form of hedging. In scenarios where central banks are forced to maintain tight policies or postpone easing, holding appropriately timed, low-credit-risk US Treasuries can provide cash flows that are far more certain than most assets. Some institutional investors prefer to bear a certain level of unrealized loss in price, as long as they can lock in as much return as possible during high interest periods, which has raised the central tendency of nominal yields and compressed the traditional space for "safe-haven yield compression."

Accompanying this is a chain of a stronger dollar and pressure on non-yielding assets: driven by the high yields in the US, the relative return advantage of dollar assets has become prominent, with funds flowing back into the dollar system from low-yielding markets where domestic currency depreciation risks are high. The dollar index has risen, raising the holding costs of dollar-denominated commodities, while non-yielding assets like gold and silver naturally pale in comparison when competing with "ten-year US Treasuries yielding over 4%." The result is that the rise in Treasury yields is clearly inversely correlated with the decline in precious metals: the former continues to "suck in money" through both nominal rates and real yields, while the latter is passively yielding under cost of opportunity and liquidity pressure.

Dual Pressure Is Not Over: Restructuring the Asia-Pacific and Safe-Haven Map

The sharp fluctuations seen on March 23 indicate that geopolitical conflicts and central bank policy expectations are jointly reshaping the hierarchy and pathways of global "safe-haven assets". The Asia-Pacific stock market, as the front line of global risk sentiment, bears the brunt when geopolitical risks rise, taking on the function of rapid risk release and pricing reset; precious metals, while nominally still viewed as safe-haven targets, are increasingly relying on the macro interest rate environment for their price performance, rather than solely on singular geopolitical events.

Before the inflation and interest rate dynamics clarify, the Asia-Pacific stock markets and precious metals are likely to remain in a high-volatility range. Any marginal change regarding the situation in the Middle East, energy supplies, or central bank statements will be magnified into severe price swings; at the same time, the fluctuations in crude oil and US Treasury yields will continue to pull the market's joint pricing for "future inflation + future interest rates," making the traditional notion of "buying gold and bonds for safety" less effective.

For investors, the biggest signal released by this shock is that the thinking of seeking safety in a single asset is failing. In the new landscape, geopolitical conflicts, energy prices, interest rate expectations, and exchange rate cycles intertwine, with cross-asset risk transmission becoming faster and more complex. The allocation aspect needs to shift from "betting on a single type of safe asset" to building more resilient combinations among stocks, bonds, currencies, and commodities, while closely monitoring the new-type correlations among US Treasury yields, crude oil prices, and precious metals. True security comes not from a single asset being labeled as a "safe haven," but from the ongoing tracking and dynamic adjustment of risk flows within the entire asset network.

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