High oil prices suppress expectations of interest rate cuts, and precious metals fluctuate and adjust accordingly.

(Author Liang Yonghui is Deputy General Manager of Zhaojin Refining Co., Ltd.)

1. Recent Market Situation Analysis

1. Geopolitical Tensions Easing, Risk Aversion Cooling Down

Recently, tensions in the Middle East have eased. Although conflicts between the US and Iran continue, their intensity has decreased, and oil prices have gradually stabilized after significant fluctuations. With G7 countries coordinating the release of strategic petroleum reserves and various parties signaling negotiations, concerns over supply disruptions have eased.

The premium support from geopolitical risks for precious metals is weakening. Historical experience shows that geopolitical conflicts tend to drive gold prices in “pulsed” bursts; once the situation clarifies, safe-haven funds gradually withdraw. Currently, market focus is shifting from geopolitical risks to fundamental factors, and investors should be alert to potential price corrections as risk sentiment recedes.

2. US Employment Data Weak, Monetary Policy Outlook Complex

US non-farm employment data for February showed weakness, with employment decreasing by 92,000 and the unemployment rate rising to 4.4%, both below market expectations. However, wage growth remains resilient, and inflationary pressures have not fully subsided.

Weak employment data should have strengthened expectations for rate cuts, but high oil prices pose imported inflation risks, complicating Federal Reserve policy decisions. The current market exhibits stagflation characteristics—“economic slowdown but sticky inflation”—which limits room for monetary easing. The Fed is expected to remain data-dependent, with rate cut timing likely further delayed. The US dollar’s strength continues to exert downward pressure on precious metals.

3. Central Bank Gold Purchases Continue, Diversification Trend Clear

Data from the People’s Bank of China shows that as of the end of February 2026, China’s gold reserves stood at 74.22 million ounces, marking the 16th consecutive month of increases. Meanwhile, global central banks’ gold purchase pace varies, with some countries planning to sell gold reserves due to fiscal needs.

Analysis: China’s continuous gold accumulation reflects strategic efforts to optimize international reserve structure. Amid accelerating global monetary system adjustments, increasing the proportion of “non-credit assets” helps enhance the safety and stability of reserves. However, investors should note that central bank gold purchases are driven more by long-term strategic allocation rather than short-term price speculation, and should not interpret these as direct drivers of gold prices. From a global perspective, reserve strategies differ between emerging and developed markets, reflecting varied risk perceptions.

2. Market Trend Outlook

1. Short-term Volatility Likely to Persist

This week, precious metals markets experienced range-bound fluctuations influenced by multiple factors. Eased geopolitical tensions, a rebound in the US dollar, and cooling rate cut expectations created resistance to upward movement, while central bank gold purchases and economic uncertainties provided support at lower levels.

Gold prices are at a critical decision point. Technically, the $5,000–$5,200 per ounce range has become a battleground for bulls and bears; any breakout in either direction requires new catalysts. Investors should monitor: (1) upcoming US economic data guiding Fed policy; (2) any new developments in Middle East tensions; (3) changes in global central bank gold purchase pace. Until the trend clarifies, range trading remains a prudent strategy.

2. Medium- to Long-term Allocation Still Valuable

Despite increased short-term volatility, the fundamental case for medium- and long-term gold allocation remains intact. From a macro perspective, structural factors such as high global debt, reshaping geopolitical landscape, and diversified monetary systems underpin gold’s support. For domestic investors, modestly increasing gold holdings in asset allocation can help diversify risks and strengthen portfolio resilience. However, caution is advised as gold prices are near historical highs; chasing higher carries risks. A phased, long-term holding approach is recommended.

3. Silver’s Performance May Lag Behind Gold

Silver, with both commodity and financial attributes, often underperforms gold amid slowing industrial demand. Currently, trading interest in silver has declined, and off-market premiums have narrowed, reflecting investor caution about economic prospects. If global economic recovery remains weak, industrial demand support for silver will further diminish. Investors should remain relatively cautious on silver.

First Financial’s exclusive original publication; this article reflects only the author’s views.

(From First Financial)