Gold plunges $50! Iran suddenly blocks the Strait of Hormuz, but the market is betting on a stagflation disaster?
2026-06-01 22:00:39
On Monday, June 1st, during the North American trading session, both the precious metals and energy markets entered a repricing phase. The situation in the Middle East further disrupted ceasefire expectations, with Iran suspending information exchanges with the US through mediation channels and mentioning risks in the Strait of Hormuz and the Bab el-Mandeb Strait. The market quickly shifted its focus from a single safe-haven logic to three main themes: "energy shocks, inflation stickiness, and interest rate revaluation."
Spot gold fell by about $50 to around $4,450 in the short term. Brent crude oil rose to about $95.90 per barrel, a daily increase of about 5.25%; the 10-year US Treasury yield rose to 4.50%. These price changes indicate that the market is not simply buying safe-haven assets, but is reassessing the transmission of rising energy prices to inflation and real interest rates.
The core of this round of market movements lies not in a single piece of news, but in the shift in the position of risk. Previously, the market had certain expectations for the continuation of the ceasefire, and asset prices implied a baseline scenario of "the conflict being controllable and energy transportation remaining sustainable." After Iran suspended information exchanges, the market began to re-induce the risk of a breakdown in negotiations, especially the tail probability of disruptions to maritime transport nodes.
The Strait of Hormuz connects to Persian Gulf energy exports, while the Bab el-Mandeb Strait is a key node in the Red Sea shipping route. Brent crude oil's nearing $96 is not due to a sudden improvement in demand, but rather a rapid recovery in supply chain risk premiums. Although crude oil prices have remained below their late April highs over the past month, the previously compressed geopolitical risk premiums will quickly be restored when risks in key straits escalate again.
From a market structure perspective, rising crude oil prices primarily affect near-term contracts, as spot transportation and short-term procurement are most susceptible to disruption. If shipping insurance premiums, detour costs, and risks associated with Middle East loading continue to rise, refineries may adjust their procurement schedules in advance, and traders will also increase their compensation for uncertainties regarding future deliveries. In this environment, oil price increases do not necessarily require large-scale supply disruptions; as long as the probability of transportation disruptions increases, the risk premium will be priced in ahead of time.
However, there are constraints to the continued rise in crude oil prices. High oil prices will suppress end-user demand and increase costs in the manufacturing, aviation, chemical, and consumer supply chains. In other words, the initial rise in oil prices is driven by geopolitical premiums, while the later stages will involve a rebalancing of "inflationary pressures and demand losses."
Spot gold fell by about $50 in the short term, hitting a low of around $4,450. While this seems to contradict the logic of safe-haven demand, it actually aligns with the interest rate framework. Gold does not generate interest, and when US Treasury yields rise and real interest rate expectations increase, the opportunity cost of holding gold also increases. Currently, the 10-year US Treasury yield has risen to 4.50%, meaning the market is discounting future asset prices using higher long-term interest rates.
Rising oil prices have a dual impact on gold. On the one hand, higher energy prices increase inflation concerns, theoretically benefiting inflation-hedging assets. On the other hand, if inflationary pressures lead the Federal Reserve to maintain a tight stance, or even cause the market to reconsider a higher interest rate environment, gold will be suppressed by real interest rates. The price performance on June 1st suggests that the latter logic is currently dominant.
Furthermore, the short-term strengthening of the US dollar also puts pressure on gold. During escalating conflicts, the dollar may still attract buying due to liquidity needs, especially when stocks, bonds, and commodities experience synchronized volatility, with some funds returning to dollar-denominated assets. This temporary demand for the dollar does not represent a revaluation of US fundamentals with optimism, but rather a change in liquidity preferences during risk events.
When oil prices rise, gold prices fall, and US Treasury yields increase simultaneously, the market is truly trading on the tail risk of stagflation. An energy shock means inflation may be harder to fall; rising bond yields indicate market concerns that interest rates cannot decline rapidly; and falling gold prices suggest that safe-haven demand is being offset by pressure on real interest rates. This combination is more important to traders than the rise or fall of a single asset.
The weakening of stock index futures from their highs indicates that the equity market is beginning to assess cost-side pressures. Rising energy prices will erode corporate profit margins, particularly in the transportation, consumer, chemical, and manufacturing chains. If oil prices rise further and remain high, the market may revise down profit expectations while simultaneously increasing discount rate assumptions, putting equity valuations under double pressure.
There are three key points to observe going forward. First, whether information exchange between Iran and the US resumes will determine whether diplomatic risks ease. Second, whether there are substantial shipping disruptions in the Strait of Hormuz and the Bab el-Mandeb Strait will determine whether the risk premium for crude oil continues to widen. Third, whether Federal Reserve officials include rising energy prices in their inflation assessments will determine whether gold can escape yield suppression. Currently, the core issue for gold is not insufficient safe-haven demand, but rather the tug-of-war between safe-haven demand and interest rate pressures; similarly, the core issue for crude oil is not demand expansion, but the repricing between transportation risks and end-user affordability.
Spot gold fell by about $50 to around $4,450 in the short term. Brent crude oil rose to about $95.90 per barrel, a daily increase of about 5.25%; the 10-year US Treasury yield rose to 4.50%. These price changes indicate that the market is not simply buying safe-haven assets, but is reassessing the transmission of rising energy prices to inflation and real interest rates.
Geopolitical risks are shifting from emotional shocks to supply chain pricing.
The core of this round of market movements lies not in a single piece of news, but in the shift in the position of risk. Previously, the market had certain expectations for the continuation of the ceasefire, and asset prices implied a baseline scenario of "the conflict being controllable and energy transportation remaining sustainable." After Iran suspended information exchanges, the market began to re-induce the risk of a breakdown in negotiations, especially the tail probability of disruptions to maritime transport nodes.
The Strait of Hormuz connects to Persian Gulf energy exports, while the Bab el-Mandeb Strait is a key node in the Red Sea shipping route. Brent crude oil's nearing $96 is not due to a sudden improvement in demand, but rather a rapid recovery in supply chain risk premiums. Although crude oil prices have remained below their late April highs over the past month, the previously compressed geopolitical risk premiums will quickly be restored when risks in key straits escalate again.
From a market structure perspective, rising crude oil prices primarily affect near-term contracts, as spot transportation and short-term procurement are most susceptible to disruption. If shipping insurance premiums, detour costs, and risks associated with Middle East loading continue to rise, refineries may adjust their procurement schedules in advance, and traders will also increase their compensation for uncertainties regarding future deliveries. In this environment, oil price increases do not necessarily require large-scale supply disruptions; as long as the probability of transportation disruptions increases, the risk premium will be priced in ahead of time.
However, there are constraints to the continued rise in crude oil prices. High oil prices will suppress end-user demand and increase costs in the manufacturing, aviation, chemical, and consumer supply chains. In other words, the initial rise in oil prices is driven by geopolitical premiums, while the later stages will involve a rebalancing of "inflationary pressures and demand losses."
Why didn't gold rise in tandem?
Spot gold fell by about $50 in the short term, hitting a low of around $4,450. While this seems to contradict the logic of safe-haven demand, it actually aligns with the interest rate framework. Gold does not generate interest, and when US Treasury yields rise and real interest rate expectations increase, the opportunity cost of holding gold also increases. Currently, the 10-year US Treasury yield has risen to 4.50%, meaning the market is discounting future asset prices using higher long-term interest rates.
Rising oil prices have a dual impact on gold. On the one hand, higher energy prices increase inflation concerns, theoretically benefiting inflation-hedging assets. On the other hand, if inflationary pressures lead the Federal Reserve to maintain a tight stance, or even cause the market to reconsider a higher interest rate environment, gold will be suppressed by real interest rates. The price performance on June 1st suggests that the latter logic is currently dominant.
Furthermore, the short-term strengthening of the US dollar also puts pressure on gold. During escalating conflicts, the dollar may still attract buying due to liquidity needs, especially when stocks, bonds, and commodities experience synchronized volatility, with some funds returning to dollar-denominated assets. This temporary demand for the dollar does not represent a revaluation of US fundamentals with optimism, but rather a change in liquidity preferences during risk events.
Cross-asset signals indicate that the market is trading at the tail risk of stagflation.
When oil prices rise, gold prices fall, and US Treasury yields increase simultaneously, the market is truly trading on the tail risk of stagflation. An energy shock means inflation may be harder to fall; rising bond yields indicate market concerns that interest rates cannot decline rapidly; and falling gold prices suggest that safe-haven demand is being offset by pressure on real interest rates. This combination is more important to traders than the rise or fall of a single asset.
The weakening of stock index futures from their highs indicates that the equity market is beginning to assess cost-side pressures. Rising energy prices will erode corporate profit margins, particularly in the transportation, consumer, chemical, and manufacturing chains. If oil prices rise further and remain high, the market may revise down profit expectations while simultaneously increasing discount rate assumptions, putting equity valuations under double pressure.
There are three key points to observe going forward. First, whether information exchange between Iran and the US resumes will determine whether diplomatic risks ease. Second, whether there are substantial shipping disruptions in the Strait of Hormuz and the Bab el-Mandeb Strait will determine whether the risk premium for crude oil continues to widen. Third, whether Federal Reserve officials include rising energy prices in their inflation assessments will determine whether gold can escape yield suppression. Currently, the core issue for gold is not insufficient safe-haven demand, but rather the tug-of-war between safe-haven demand and interest rate pressures; similarly, the core issue for crude oil is not demand expansion, but the repricing between transportation risks and end-user affordability.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
