Hormuz conflict + internal divisions within the Federal Reserve, gold price faces a pullback

　　On Tuesday (July 7), during the Asian and European sessions,

　　The market had originally pinned its hopes on the ceasefire in the Middle East and the US Federal Reserve’s policy pivot to shield gold from inflation-driven rate hikes. However, the macro gears turned sharply on Tuesday due to a missile near the Gulf of Oman and Waller’s speech—the latest developments in the Strait of Hormuz, combined with Federal Reserve Governor Waller’s remarks in Rome, not only failed to fuel gold but have instead imposed a chain of blows from “inflation worries” to a “bond market storm,” creating heavy dual pressure on gold prices.

　　Strait Conflict Escalates: No Trigger for Safe-Haven Buying, But Sets Off Inflation and Rate-Hike Alarms

　　Early Tuesday morning, an LNG carrier was attacked off the coast of Oman, opening a new chapter in the Middle Eastern shipping routes.

　　Tehran is using high-intensity military force to forcibly reclaim control of the strait.

　　With Iran issuing mandatory navigation bans and precise strikes on alternative routes, the number of merchant ships using the once-safe new Omani channel has plummeted, forcing global shipping companies back under Iran’s designated rules.

　　However, the escalation of this conflict hasn’t brought much safe-haven buying for gold. Instead, it has imparted a suffocating sense of inflation to the market. Disruption in critical energy routes has pushed premiums for oil and gas supplies sharply higher again.

　　Forward Guidance Dispute Drives Up US Treasury Yields

　　Against the backdrop of prepared conditions for rate hikes, Waller’s revelation of “internal route struggles” at the Federal Reserve has set a deadly trap for gold.

　　Currently, new chairman Kevin Walsh is forcibly pushing aggressive reforms, aiming to streamline the Fed’s policy statements by downplaying or even abandoning “forward guidance.”

　　It’s also worth noting that Waller did not mention the recent underperformance of non-farm payrolls when confirming the labor market’s good performance. If non-farm payrolls continue to disappoint, it could directly change his view on the labor market’s resilience.

　　Ultimate Intersection: A Lethal Strike, Gold Is Facing "Double Drainage"

　　At the climax of this macro drama, the artillery in the Strait of Hormuz and the infighting within the Fed have combined through the channel of “US Treasury yields” to put targeted pressure on gold:

　　As a non-interest-bearing asset, gold fears nothing more than the combination of “high inflation forcing central bank rate hikes” and “surging US Treasury yields.”

　　First pressure: The ship attack in the Strait of Hormuz and quietness in Oman’s routes essentially help the Fed make hawkish decisions. Inflation worries do not equal safe-haven demand—they directly harden market expectations for another Fed hike in July or September.

　　Second pressure: The risk of “abandoning forward guidance” exposed by Waller’s remarks is the biggest landmine in the bond market. If Treasury yields soar out of control due to expectations, global capital will flood into risk-free treasury yields, pushing the holding costs of gold to terrifying levels.

　　Furthermore, if the bond market falls sharply and triggers margin calls, institutions will often prioritize selling highly liquid assets like gold to cash out and “put out fires.”

　　Summary and Technical Analysis:

　　In this round of the game, Middle Eastern missiles have become the fuse for inflation, while the Fed’s chaotic communication expectations are boosting Treasury yields.

　　When these two forces combine, the surge in Treasury yields becomes the ultimate lethal weapon that is killing gold bulls. However, for the time being, the Strait of Hormuz remains navigable.

　　Markets are still closely watching Thursday’s Fed meeting minutes and next week’s CPI data.

Editor: Zhu Henan