Sinolink: Oil prices have fallen, but why isn't gold rising?

Sinolink released a research report stating that the main headwind for gold in the short term is that the money-making effect of AI is disrupting chaos. Looking back at the second half of 2025, the reason for gold's epic rally was the demand for safe-haven assets. At that time, the biggest market risk was the bubble of AI narratives, with giant companies intertwining and investing in each other, engaging in a capital expenditure arms race against a backdrop of no significant increase in actual profits. Liquidity and risk appetite supporting US stock valuations also boosted the demand for gold as a safe-haven asset, making gold a hedge against AI narratives, with the trading strategy of "left hand AI, right hand gold" becoming the most crowded in the market. When the monetization path of AI becomes clear and the stock prices of AI-related companies return to a profit-driven logic, the risk premium of the technology sector does not rise but falls, becoming the main headwind for gold in the short term. Sinolink's primary views are as follows: Although oil prices have recently fallen significantly due to expectations of easing US-Iran tensions and the reopening of the Strait of Hormuz, US bond yields have also slightly decreased, gold is still trading in a narrow range around $4400-4500 and has not generated new upward momentum, the core reason being that three support factors for gold have temporarily weakened. First, the money-making effect of AI has once again strengthened. In 2025, the significant rise in gold was due to market concerns about an AI bubble and overvaluation of technology stocks, with gold taking on the role of hedging against the uncertainty of AI narratives. However, since March of this year, applications such as OpenClaw have quickly gained traction, pushing large companies to transition from "subscription income" to "subscription + usage-based payment" business models. With a clearer path to monetization for AI, the rise in technology stocks has once again shifted towards profit-driven, reducing the market's demand for gold as a safe-haven asset. Fund flow data also shows that technology funds have continued to flow in, while precious metals funds have seen outflows. Second, the most important liquidity turning point for gold in the short term has not yet occurred. Although oil prices and US bond yields have fallen in the short term, the market remains concerned about a second wave of inflation. As of the end of May, futures markets have not priced in rate cuts for the year, gold ETF holdings have declined since March, and non-commercial net long positions in CFTC have fallen to near two-year lows, indicating that trading funds are reducing leverage, taking profits, or reducing bets on further gold price increases. Market sentiment has clearly declined. Third, the "chaos premium" brought by Trump has diminished. The significant rise in gold in 2025 partly priced in the impact of Trump's policies on US credit, trade order, and US institutional boundaries. However, since the beginning of this year, tariffs have been constrained by the judiciary, Federal Reserve personnel arrangements have not become extremely politicized, the fiscal deficit expansion slope has eased, and the "brake mechanism" of the US political system has started to work, leading to a temporary decline in the credit risk premium of the US dollar and gold transitioning from unilateral upward movement to consolidation. Looking ahead, the bank believes that gold has not completely lost the possibility of upward movement. If the Federal Reserve signals relaxation, AI trends bubble up again, or Trump breaks institutional boundaries and damages US credit before the next election, gold could return to its previous highs or even reach new highs. From an allocation perspective, last year, gold rose too quickly and fluctuated significantly, but this year it has entered a phase of reduced volatility, which may provide a more suitable window for medium to long-term funds to increase allocation. Risk warning: Federal Reserve policy path is more hawkish than expected; AI profitability verification exceeds expectations; US political risk premium continues to decline.