The medium- to long-term impact of the Middle East conflict may persist; gold and crude oil markets enter the second half of the trend.

Specifically, regarding the crude oil market, on one hand, geopolitical negotiations still present uncertainties, with the risk of a return to high oil price volatility remaining; on the other hand, the shortage of spot supply has become an established fact, and compared to the resumption of air routes, the resumption of crude oil production in Gulf countries may require more time. According to Bloomberg data, OPEC crude oil output in March was already below the June 2020 low, decreasing by about 7.56 million barrels per day compared to the previous month. Therefore, the downside space for oil prices may be relatively limited, and if progress in geopolitical negotiations falls short of expectations, the risk of high volatility returning still exists.For the gold market, CICC believes that there may be room for correction in the previously priced-in expectations of interest rate hikes. Whether it is an oil price correction following easing geopolitical tensions, a shift of monetary policy back towards an accommodative stance, or intensifying supply shocks increasing recessionary pressures and highlighting the safe-haven value, cyclical investment demand and gold prices are both expected to have opportunities for recovery in the second half of the year. In addition, as of March this year, the central bank of China has increased its gold reserves for 17 consecutive months, with the amount held in March further rising to 4.98 tonnes. Medium- to long-term demand for gold purchases by central banks is expected to continue providing structural support for gold prices.