When Oil Turns into "Gold"

WealthCoffee · 2026-03-23T01:55:08+00:00

Since the outbreak of the Middle East conflict on February 28, market expectations have shifted from short-term shocks to medium-term disturbances. Although precious metals generally perform better in stagflationary environments, gold has recently underperformed risk assets, possibly due to cash flow pressures and supply shortages. In the short term, gold's movement depends on the situation in the Middle East, but from a medium to long-term perspective, it is still advisable to allocate gold as a hedge against the credibility of fiat currency.

WealthCoffee

2026-03-23 01:55:08

Abstract generation in progress

Since the outbreak of the current Middle East conflict on February 28, the overall fighting has been escalating, and market pricing of the conflict’s duration and impact continues to update. The probability distribution is shifting from “short-term shock” to “medium-term disturbance.”

Generally, in an environment of stagflation, the dual attributes of safe-haven and inflation resistance make precious metals like gold perform well. However, in this cycle, gold and similar assets have performed even worse than most risk assets. This article explores the logic behind this divergence and its certain inevitability to some extent. Gold may have already become a “canary in the coal mine” under the current trends of Gulf countries, emerging markets, and even global cash flow pressures and material shortages. Its short-term trend largely depends on the severity of the Middle East tensions. However, in the medium to long term, we maintain our recommendation to allocate in scarce resources like gold to hedge against fiat currency credibility. Meanwhile, although the US-Israel-Iran conflict has temporarily boosted risk aversion, in the medium to long term, it will further reinforce the logic of expanding global capital expenditure and a significant increase in material consumption.

We recommend accessing the Caixin database, where you can always check macroeconomics, stocks, bonds, corporate figures, and financial data at your fingertips.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

1 Likes