On Thursday (August 20), the Middle East deadlock remained unresolved, commercial navigation in the Strait of Hormuz remained severely restricted, and another oil tanker hijacking occurred in the Gulf of Aden, keeping oil risk premiums high. The US Treasury expanded its long-term Treasury bond repurchase program, causing US Treasury yields to fall and the dollar to approach a three-month low, supporting gold and silver prices. In the short term, the market is driven by alternating forces of geopolitical supply anxieties and a weak dollar, potentially leading to increased volatility. Global markets were driven by two main themes today: Middle East geopolitics and shipping security, and a weakening dollar resulting from US Treasury liquidity operations. Anxiety over oil supply intensified, with traffic through the Strait of Hormuz far below pre-US-Iran conflict levels, and armed boarding incidents reported in the Gulf of Aden. The doubling of US Treasury repurchase agreements lowered yields, benefiting precious metals. UK factory orders hit a new high, but price expectations rebounded.

The Hormuz and the Gulf of Aden: The "Twin Engines" of Supply Anxiety

The US Navy's blockade of Iranian ports continues, with protected routes seeing an average daily outflow of about 5 million barrels of crude oil from the Gulf, significantly lower than pre-war levels, reinforcing narratives of supply shortages. A tanker in the Gulf of Aden was boarded by six armed men and diverted towards Somalia, raising expectations of increased insurance and freight costs on the Red Sea/Gulf of Aden route, indirectly supporting oil prices. The deployment of an aircraft carrier confirms expectations of a strengthened military presence, which may slightly increase demand for the US dollar as a safe haven in the short term, but its medium- to long-term impact depends on whether it is accompanied by actual military action.

US Treasury liquidity operations: Weakening dollar benefits precious metals

The US Treasury announced it would at least double its long-term Treasury bond buybacks to support liquidity, causing US Treasury yields to fall and the dollar index to near a three-month low. This directly boosted gold and silver prices, with gold challenging its recent highs and silver showing even greater resilience. Non-US currencies also strengthened. If the dollar's weakness continues in the short term, precious metals will still have support; however, if the market interprets the buybacks as debt concerns, it could reinforce the "dollar depreciation trade" sentiment and amplify volatility.

UK orders rebound: demand bright spots and price pressures

Surveys by major overseas institutions show that the UK's factory orders index rose to its highest level since November 2024 in August, and export orders turned positive for the first time since June 2022, providing a boost to demand for risk assets. However, price expectations rebounded simultaneously, reflecting the transmission of oil costs. For the pound, the data was positive but not enough to change monetary policy expectations on its own; it was more likely to follow the weakening of the US dollar.

Black Sea and Weather: Marginal Noise, Not a Main Theme at This Time

A fire broke out at an energy port in the Black Sea due to drone debris, but was quickly extinguished, and the impact was assessed to be limited. Regular showers occurred in the European/British waters, and the Southeast Asian monsoon was strong, but did not cause significant disruption to major crude oil shipping routes. Such events are negligible in the short term, but risks in the Black Sea region persist in the long term, and could amplify volatility if combined with other supply shocks.

PART 4: Trend Outlook

In the short term, the Gulf of Aden hostage crisis, Qatar's mediation signals, and fluctuations in US Treasury yields and the US dollar are likely to trigger high-frequency volatility, especially during the Asian/European opening sessions. Oil prices are highly sensitive to any signals regarding air traffic control or diplomatic relations, while gold and silver are supported by a weak US dollar. In the longer term, if the restrictions imposed by the Strait of Hormuz persist, expectations of declining global inventories could further increase the risk premium for oil prices, leading to market discussions about a potential move to higher levels. If the US dollar remains weak, precious metals may maintain a relatively strong position. Tail risks include a complete standstill in the Strait of Hormuz, a failed mediation leading to military escalation, and the spread of the Gulf of Aden conflict; geopolitical developments over the weekend warrant close attention.

Frequently Asked Questions

How significant is the current impact of the Strait of Hormuz? Protected shipping lanes are seeing an average daily outflow of about 5 million barrels, far below pre-war levels, severely restricting commercial navigation and supporting oil prices through narratives of tight supply. How does the US Treasury buyback program affect gold? Buybacks expand liquidity, lowering yields and dragging down the dollar. Gold is priced in dollars and pays no interest; a weaker dollar and safe-haven demand jointly push up precious metal prices. Will the Gulf of Aden hostage crisis continue to escalate? The event has already occurred; a swift resolution would likely have a short-term impact. However, risks in the Red Sea/Gulf of Aden may recur, and rising insurance and freight costs could create stickiness. Can Qatar's mediation reverse oil prices? Mediation continues, but a short-term breakthrough is unlikely. Substantial dialogue signals could temporarily squeeze risk premiums; further observation is needed. Is the Black Sea port incident worth trading? Current assessments suggest minimal impact, primarily a background risk. However, long-term disturbances in the Black Sea region could amplify volatility if combined with other supply shocks.