Gold and silver plummeted, while crude oil surged. What happened?

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Source: International Financial News

On April 2, the bulk commodities market showed a distinct pattern of divergence. Gold and silver—belonging to the precious metals sector, which had been rebounding for several days—suddenly reversed course, with both gold and silver falling sharply. In sharp contrast, the international crude oil market saw another explosive surge, with violent price swings.

In the spot market, as of the time of publication, London spot gold was down 2.97% on the day, at $4,616.809 per ounce. During the session, it had touched a high of $4,800.46 per ounce, then again fell below the $4,600 per ounce level, with a low of $4,553.158 per ounce. London spot silver fell even more sharply: down 5.80% on the day, at $70.683 per ounce, and at one point dropped below the $70 per ounce mark.

In the futures market, prices moved down in tandem. As of the time of publication, COMEX gold futures were down 3.54% on the day, at $4,642.9 per ounce. The contract had climbed to a session high of $4,825.9 per ounce, before falling to a session low of $4,580.4 per ounce. COMEX silver futures’ decline widened further to 6.62%, at $71.045 per ounce, with a low of $69.66 per ounce.

By contrast, the international crude oil futures market showed an explosive rise. As of the time the reporter issued this story, WTI crude oil surged 7.54% to $107.67 per barrel, reaching a session high of $108.03 per barrel. Brent crude oil futures rose 7.29% to $108.53 per barrel, hitting a session high of $109.18 per barrel.

Geopolitical developments became the core trigger for the large-scale volatility in this bulk commodities market. On the news front, local time on April 1, U.S. President Trump delivered a speech in Washington, claiming the war with Iran had achieved “rapid, decisive, overwhelming victory.” Trump said the United States’ core strategic objectives in the war with Iran were “nearly completed,” and that all military objectives could be achieved “within a very short time.” “In the next two to three weeks, we will carry out extremely fierce strikes against them… and negotiations are also underway.”

“After Trump’s remarks were made, the market once again worried about an escalation of the Iran war, which triggered large swings in bulk commodity prices.” Leng Yudong of the Tianzhong Futures Investment Consulting Department said that recently, fluctuations in crude oil prices have constrained the pace of gains in precious metals, and the two have shown characteristics of inverse movement. When geopolitical tension is high: crude oil rises, the U.S. dollar rises, and gold falls. Conversely, when geopolitical tensions ease: crude oil falls, the U.S. dollar recedes, and gold rebounds. The fundamental logic lies in capital’s concern about global future inflation expectations.

“Expect that in the near term, crude oil prices are very likely to continue to exhibit the characteristic of volatile trading at high levels.” Leng Yudong said. Based on historical experience, geopolitics’ impact on crude oil prices tends to be more short-term, but it is also necessary to watch whether future disruptions to Middle East energy infrastructure will be greater. If conditions in the Middle East worsen further, expectations for crude oil to move higher again cannot be ruled out, which would in turn continue to suppress the overall trend of precious metals.

Regarding the gold market, Xia Yingying, head of the precious metals and new energy research group at Nanhua Futures, said that looking ahead to the second quarter, three major variables—evolution of Middle East conditions, Fed policy, and supply-and-demand fundamentals—will interact and still jointly determine the pace of the precious metals market. However, at the margin, the impact driven by geopolitical events is expected to gradually weaken, and prices may return to being dominated again by drivers from monetary policy adjustments and fundamentals.

From the perspective of supply-and-demand fundamentals, Xia Yingying further analyzed that for gold, the long-term trend of central banks buying gold remains unchanged, supporting a solid base. But in the short term, outflows of investment demand have created phased suppression; going forward, it is necessary to watch whether the pace of central bank gold buying will accelerate. For silver, its high volatility is constrained by both traditional industrial demand and inventory adjustments, so it is necessary to pay extra attention to two categories of factors: first, new industrial demand such as new energy and AI computing power; second, the moving forward of delivery months’ positions, delivery inventory, and the pressure arising from delivery squeeze.

“Rational investing has never been just a slogan—it is also a survival rule in the world of investing.” Leng Yudong emphasized that the current shared characteristic of crude oil and gold is that both are trading at relatively high levels, and the overall products exhibit the feature of large fluctuations at high levels, which undoubtedly increases the difficulty of investing. One-way strategy trading is difficult, and it also places stricter requirements on capital management. Given the current market’s volatility characteristics, investors are advised to appropriately adopt a volatility strategy, maintain rational objectivity and a clear mind, strictly control position sizes, treat trading from an investment perspective, avoid short-term speculation, and prepare risk response plans.

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责任编辑：Yang Hongbo