Commerzbank’s Barbara Lambrecht highlights that since the onset of the Iran war, oil prices have become the primary driver of gold price movements, influencing inflation expectations and monetary policy outlooks. The correlation observed is that rising oil prices increase inflation risks, which in turn heightens the likelihood of tighter monetary policy, thereby raising the opportunity cost of holding gold and putting downward pressure on gold prices [1].
Over the past seven trading days, this inverse correlation between oil and gold persisted, with gold prices stabilizing near USD 4,600 per troy ounce. However, sentiment shifted recently as robust US orders and climbing oil prices stoked fears of higher interest rates. As a result, gold prices slipped below USD 4,550 and closed just above USD 4,500 per troy ounce, marking a one-month low [1].
On the demand side, China’s appetite for gold bars and coins surged in the first quarter, with demand nearly 67% higher than the previous year and accounting for just under 45% of global bar and coin demand, according to the World Gold Council. This strong demand outside the jewelry sector may be a factor in China’s decision to relax gold import rules starting in June. The People’s Bank of China has published a draft proposal to expand the application of “multi-use permits,” extend their validity from six to nine months, remove usage limits, and authorize more Chinese ports to clear bullion [1].
CONCLUSION
Gold prices have come under pressure due to rising oil prices and robust US economic data, which have heightened interest rate concerns. However, surging Chinese demand and upcoming import rule changes may provide support for gold in the coming months. The market remains sensitive to both macroeconomic developments and shifts in Chinese policy.