Brent surges 13%, gold price approaches 5,400! Geopolitical storm sweeps the market, experts say: the logic has completely changed
Source: Global Market Report
On March 2, the international commodities market experienced a rare "Black Monday" style opening, with both oil and gold prices surging sharply at the open. The sudden escalation of geopolitical risks completely ignited bullish sentiment in the capital markets.
As of press time, trading sentiment remains heated. Brent crude oil (Brent) once soared by 13% at the open, reaching $81.57 per barrel; U.S. crude oil (WTI) rose by 11% to $75 per barrel. Precious metals were even more impressive, with COMEX gold futures opening up nearly 3%, approaching the $5,400 per ounce mark, and spot gold rising by more than 1%. Although the intraday gains narrowed slightly, as of press time, spot gold was still up 1.67%, hitting an intraday high of $5,393 per ounce, setting a new short-term high; Brent's gain fell back to 8.66%, WTI up 8.18%, but both remained at elevated levels.
Regarding this round of sharp oil price fluctuations, Dong Xiucheng, Executive Dean of the China International Carbon Neutral Economy Research Institute at the University of International Business and Economics, pointed out that the short-term price spike mainly stems from extreme concerns about supply-side disruptions. Dong analyzed that Iran, as OPEC's third-largest oil producer, exports about 1.5 million barrels per day. If its ports or key facilities are attacked, it would directly lead to a physical reduction in global crude oil supply. More critically, as the choke point for 20% of the world's seaborne crude oil, the shipping risks in the Strait of Hormuz are rising sharply.
"The current market has shifted rapidly from the traditional 'supply-demand driven' model to a 'purely geopolitical driven' model." Dong stated that in this model, rising insurance premiums for shipping, traders scrambling to stockpile, and panic over supply disruptions will all concurrently push oil price costs higher. He predicts that, on top of the existing $10/barrel geopolitical premium, Brent and WTI crude oil markets will likely open 5% to 10% higher, making prices more likely to rise than fall.
As for the simultaneous surge in gold prices, Wan Zhe, a professor at Beijing Normal University, believes that the sustainability of this rally will depend entirely on the subsequent development of geopolitical risks.
Wan reminds investors that gold prices may show "increased volatility at high levels" in the short term—while there is strong upward momentum, the risk of a subsequent correction also rises significantly. From a mid-term perspective, the pace at which the Federal Reserve delivers on rate-cut expectations will be a key variable, as the speed of rate cuts will directly affect the holding cost of gold. "From a long-term perspective, although gold price volatility will ultimately normalize, we must be clear that the overall high-price cycle for gold is not yet over." Wan concluded that, against the backdrop of global geopolitical fragmentation and the restructuring of the monetary credit system, gold's value as a safe-haven allocation remains historically high.
Industry insiders generally believe that the opening market on March 2 indicates that the market's pricing efficiency for geopolitical "black swans" is improving. In the absence of clear signs of easing in the Iranian situation and the navigational safety of the Strait of Hormuz, volatility in the energy and precious metals markets will remain elevated.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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