Why is gold dropping instead of rising during wartime? What I’m seeing is strong oil, weak gold. Let’s break it down into a few key points: 1. Inflation: The U.S. March CPI came in slightly above expectations: MoM +0.9%, YoY +3.3%. The key driver? Energy—MoM surged +10.9%, and gasoline skyrocketed +21.2%. This reignited market expectations for a “second wave of inflation.” 2. Market interest rates: The market is still betting that the Fed will likely stay put throughout 2026. Even by year-end, the probability of rate cuts is only around 30%. This time, the market is leaning more toward “safe-haven USD” rather than gold. The dollar index is holding at a one-week high, while gold remains under pressure, having pulled back about 10% from its February peak. This explains a phenomenon many find puzzling: This round of geopolitical conflict hasn’t driven gold to rally. On the oil side, geopolitical drama is heating up: U.S.-Iran talks have collapsed, and the U.S. is targeting Iranian port shipping. Risks in the Strait of Hormuz are escalating again. Oil tankers are actively rerouting, with Brent crude spiking to $103 and WTI climbing back above $104. Although Saudi Arabia restored the East-West pipeline to 7 million barrels/day, which offsets some transportation issues, the market’s risk premium for “Middle East supply shocks” is still evident. So the current macro transmission logic is: Middle East conflict → Oil prices rise → Inflation expectations increase → Rate cut expectations pushed back / USD strengthens → Gold under pressure To sum up: This round isn’t about “safe-haven buying of gold,” but rather “inflation-driven oil buying + safe-haven USD buying.” #XAU #OIL