Sinolink: Gold prices in the short term focus on the Fed's inflation trade-off; U.S.-Iran tensions affect liquidity expectations.

Sinolink released a research report stating that in the short term, focus should be on the Fed's trade-off between energy and core services inflation, as well as the impact of U.S.-Iran tensions after the midterm elections on oil prices, rate expectations, and liquidity. Gold's long-term allocation value still depends on the continued erosion of fiat currency credibility by deficit expansion and debt accumulation in developed countries. Whether AI can improve productivity and fiscal sustainability will affect the pace at which this logic materializes. If subsequent war escalation and surging oil prices fail to push rate hike expectations further higher, falling real rates and safe-haven demand could provide support. In this scenario, if gold still falls due to deleveraging and cash demand, it is more likely to enter a medium-term bottoming zone, providing opportunities for long-term allocation. Sinolink's main views are as follows: Gold has recently fallen in sync with U.S. equities while U.S. Treasury yields have pulled back, reflecting differences in the safe-haven logic and capital attributes of different assets. Gold is both a long-term reserve asset and a financial asset that can be quickly liquidated. When AI-related stock market declines resonate and localized deleveraging pressure rises, investors may sell gold to replenish margin and cash, causing short-term funding-side influences to outweigh long-term safe-haven logic. The dollar index has not strengthened significantly, which is not yet sufficient to rule out localized liquidity pressure; potential yen intervention could also interfere with this signal, but this remains to be confirmed. The risks hedged by U.S. Treasuries and gold are not the same. U.S. Treasuries benefit more directly from growth concerns and declining risk appetite within the dollar system, while gold absorbs more concerns about the credibility of the dollar system. Current market doubts about AI are mainly concentrated on investment returns and tech stock valuations and have not yet fully expanded to the overall financing capacity of the United States. Funds can therefore sell tech stocks, buy U.S. Treasuries, and remain within the dollar system. Only when concerns about insufficient AI returns further transmit to financial stability, fiscal burdens, and policy responses may gold's value in hedging dollar credit risk become more prominent. There is no fixed one-way relationship among war, oil prices, and gold. Escalating conflict may increase safe-haven demand, but it may also strengthen monetary tightening expectations through energy inflation, constraining gold prices. Gold's 3-month implied volatility has fallen back to about 24%, at the 64th percentile of the past year, indicating that volatility expectations have cooled somewhat, but this is not yet sufficient to confirm a price bottom. In the short term, focus should be on the Fed's trade-off between energy and core services inflation, as well as the impact of U.S.-Iran tensions after the midterm elections on oil prices, rate expectations, and liquidity. Gold's long-term allocation value still depends on the continued erosion of fiat currency credibility by deficit expansion and debt accumulation in developed countries. Whether AI can improve productivity and fiscal sustainability will affect the pace at which this logic materializes. If subsequent war escalation and surging oil prices fail to push rate hike expectations further higher, falling real rates and safe-haven demand could provide support. In this scenario, if gold still falls due to deleveraging and cash demand, it is more likely to enter a medium-term bottoming zone, providing opportunities for long-term allocation. Risk warning: Inflation, war, and monetary tightening exceeding expectations; cross-market deleveraging exceeding expectations; AI investment returns and productivity gains exceeding expectations.