Fake Peace, Prices Remain Hot!
Donald Trump's signal of de-escalation has given the market a breather, but it's not strong enough to allay investor fears. Recent reports suggested Trump was willing to end the military campaign against Iran even if the Strait of Hormuz hadn't been fully opened, and the market immediately interpreted this headline as a chance for a de-escalation. However, the market is also aware that this is merely a political signal, not a concrete solution on the ground. As long as the world's most vital energy routes remain disrupted, the de-escalation is more apt to be described as a "cooling of the tone" than a truly solid peace.
The most immediate reaction was seen in the oil market. After previously surging sharply due to war premiums and concerns about supply disruptions, oil prices fell by around 1% in the Asian session following Trump's news. Reuters noted that Brent fell to around US$111.56 per barrel and WTI to around US$101.90, indicating that some market players were beginning to unwind defensive positions as the likelihood of a prolonged war appeared to be easing. However, this correction reflected a reduction in the panic premium, rather than a fundamental change in global supply risks. In other words, the oil market fell because tensions eased slightly, not because the energy problem was resolved.
What makes oil remain sensitive is the fact that the underlying issue remains unresolved: energy flows through Hormuz have not yet returned to normal. This route is crucial for global oil trade, and the market understands that without Hormuz's full reopening, supply remains at risk of disruption. Reuters also reported attacks on tankers near Dubai and the rerouting of Saudi exports, confirming that logistical and security risks remain real. Therefore, although the headline de-escalation temporarily weighed on prices, oil's downside room remains limited as long as the physical disruption to the energy supply chain remains intact.
In the currency market, the impact on the dollar tends to be more complex. Intraday, the DXY briefly weakened from its highest peak this year and moved below 100.50 as hopes of de-escalation reduced some safe-haven demand. However, this weakening was not aggressive, as the market still believes that surging energy prices have the potential to keep inflation high and make it difficult for the Federal Reserve to quickly shift to dovishness. Reuters noted that the dollar actually posted a monthly gain of around 2.9% in March, its largest monthly gain since July 2025. So, for now, the dollar is stuck between two forces: news of peace, which suppresses demand for safe havens, and the threat of energy inflation, which supports expectations of higher interest rates for longer.
Gold moves in a pattern that is also not simple. In theory, news of de-escalation should pressure gold as the need for geopolitical hedging diminishes. However, market reality shows that gold is still able to rise daily, with Reuters noting that spot gold strengthened by around 1.1% to around US$4,561.68 per ounce on Tuesday. This indicates that investors have not completely exited their protective gear. There are two main reasons: first, the conflict is not yet fully resolved; second, the market still perceives global economic risks from energy shocks. Even so, the pressure on gold has not disappeared, as the strong dollar and fading expectations of a Fed rate cut keep gold's gains in check and remain vulnerable to being contained.
This is where the relationship between gold, oil, and the dollar becomes crucial to read together. Rising oil prices fuel global inflation concerns, which reduce the likelihood of interest rate cuts, and thus support the dollar. A strong dollar ultimately weighs on gold, although it remains sought after as a hedge against escalating conflict. This means that gold is not currently operating in a "clean" safe haven environment, but rather in a market torn between the need for geopolitical protection and the monetary pressures stemming from expensive energy. Consequently, gold's recent movements have tended to be choppy: rising on the risk of war, but held back as interest rate markets become more hawkish.
Looking ahead, the outlook remains volatile. For oil, as long as Hormuz remains unaffected, prices have the potential to remain high and easily surge again with any new attacks. Therefore, a range of US$100+ for WTI and a range above US$110 for Brent are still very plausible in the near term. For gold, a rebound remains possible if market doubts about the peace process return or if the conflict escalates into a more prolonged energy crisis, but the upside is unlikely to be straightforward, as the dollar and interest rate expectations remain key drags. In other words, the immediate outlook is that oil remains structurally bullish, while gold tends to be bullish-volatile: strong when tensions rise, but prone to corrections whenever the market interprets peaceful headlines as a credible step forward. (asd)
Source: Newsmaker.id
