Reasons for the Sharp Drop in Gold and Crude Oil

On April 15, gold and crude oil both saw a sharp decline in tandem, mainly driven by the combined impact and resonance of three factors: geopolitics, macroeconomics, and liquidity/funds.

For gold: the geopolitical situation in the Middle East showed marginal improvement; safe-haven funds withdrew significantly, and the previously accumulated safe-haven premium quickly faded; on top of that, U.S. inflation data came in above expectations, causing the Federal Reserve’s rate-cut expectations to be postponed again, strengthening the U.S. dollar and U.S. Treasury yields, and dampening bullish sentiment in gold. In addition, since gold prices had been trading at high levels beforehand, a large volume of profit-taking was concentrated in selling, triggering technical stop-losses, further intensifying the downtrend.

For crude oil: as geopolitical conflicts cooled, market concerns about interruptions to crude oil supply were greatly alleviated, and the oil price premium quickly fell back. Meanwhile, global oil demand expectations were lowered; market fears that demand might be weak led to worries about oversupply. Coupled with the fact that after crude oil had surged earlier, long positions took profits, these two negative factors pushed oil prices sharply lower.

Overall, the key reasons for the simultaneous sharp selloff in both commodities are the retreat of safe-haven sentiment, macro headwinds, and technical selling pressure.
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