Long-term impacts or sustainability in the Middle East conflict interpretation of the gold oil performance in the second half of the game.

The China International Capital Corporation (CICC) analysis believes that the current ceasefire negotiations and the expected resumption of navigation in the Strait of Hormuz are likely to alleviate the short-term risk of excessive oil price increases and pressure to sell gold, but the second half of the geopolitical situation is yet to unfold. Specifically, for the oil market, on one hand, there is still uncertainty in geopolitical negotiations, and the risk of high volatility in oil prices remains; on the other hand, the shortage of physical crude oil has become a established fact, and compared to the resumption of navigation, it may take more time for Gulf countries to resume oil production. According to Bloomberg data, OPEC crude oil production in March was lower than the low point in June 2020, decreasing by approximately 7.56 million barrels per day compared to the previous month. Therefore, the potential for further decline in oil prices may be limited, and if geopolitical negotiations do not progress as expected, the risk of high volatility may return. As for the gold market, CICC believes that the previously anticipated interest rate hikes may have room for adjustment, and whether it is a rebound in oil prices after easing geopolitical tensions, a return to loose monetary policy, or an intensification of supply shocks causing recessionary pressures, triggering safe-haven value, the periodic investment demand and price of gold may have opportunities for recovery in the second half. In addition, as of March this year, the People's Bank of China has been increasing its gold reserves for 17 consecutive months, with an increase of 4.98 tons in March, indicating that the medium- to long-term central bank demand for gold is expected to continue to provide structural support for the price of gold.