ATFX: Trump's Iran deadline approaches; crude oil and gold face three major scenario tests

Feature: ATFX Forex Column Submission

April 7th, ATFX: As the deadline for Trump regarding Iran approaches tonight at 8 PM Eastern Time, due to increased uncertainty, stock markets and crude oil prices are experiencing heightened volatility, while gold remains on the sidelines. Despite initial signals of a ceasefire, the risk of further escalation still exists, and most traders remain cautious.

Iran stated on Monday that it hopes to permanently end the war with the United States and Israel, resisting pressure to reopen the Strait of Hormuz. Meanwhile, U.S. President Trump warned that if Iran fails to reach an agreement by the late Tuesday deadline, it could be “eliminated.”

Trump said that negotiations with Iran are “progressing smoothly” before the final deadline for an agreement, but he also insisted that any deal must include freedom of navigation through the Strait of Hormuz. On Monday, Trump warned that if Iran does not accept U.S. conditions, U.S. forces might “destroy all bridges inside Iran by 12 a.m. tomorrow” and shut down all power plants.

After two days of declines, gold prices stabilized, approaching $4,660 per ounce in early trading today, after falling over 2% in the previous two days. Traders are weighing Trump’s latest threats to destroy Iranian infrastructure against the ongoing war’s impact on inflation and economic growth. On Monday, following Trump’s new threats, U.S. Treasury bond prices rose slightly, with bond traders expecting the Federal Reserve to keep interest rates unchanged for the rest of the year. Since gold does not pay interest, higher borrowing costs put pressure on gold.

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Since the outbreak of Middle East conflict in late February, gold prices have fallen about 12%. Investors have sold gold positions to offset losses elsewhere, weakening gold’s appeal as a traditional safe-haven asset. Gold price movements are generally inversely related to oil prices, which continued to rise for the third consecutive day on Tuesday, reaching levels not seen since March. However, as gold prices decline, there are signs that bargain hunters are slowly increasing their holdings. Bloomberg’s calculations show that last week, gold ETF holdings increased for the first time since the outbreak of war.

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Possible Scenarios When the Deadline Arrives

再次“技术性延期”: As in past operations, near the deadline, Trump may announce a short-term extension citing “progress” in negotiations, temporarily easing market panic. Oil prices could see a technical correction, while gold may come under pressure as safe-haven demand cools.

Limited Military Strikes: Trump might carry out “limited” strikes on targets such as Iranian power plants and bridges, as threatened, but avoid large-scale ground operations to exert maximum pressure. Oil prices could fluctuate sharply, possibly surging intraday, while gold may again face downward pressure.

Further Escalation of Conflict: The scope of strikes could expand, with increased threats and more intense rhetoric and actions from both sides, potentially triggering energy market turmoil. Oil prices could spike to higher levels; gold might fall further due to the strengthening dollar and rising oil prices. Investors suffering losses in stocks and other markets may be forced to sell gold for cash to cover other asset losses. It’s important to note that current market volatility is extremely high, and any unilateral bets based on “outcomes” carry significant risks. Maintaining flexible positions is the first principle in managing uncertainty.

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Editor: Chen Ping