Z.WANG

Three-Phase Gold Price Trend Projection Since the US-Iran War

The most controversial issue in the market recently is that gold continues to weaken in an environment of "high real interest rates + a strong US dollar," coupled with the Federal Reserve's persistent hawkish signals. Does this mean the previous uptrend has completely failed?

① Has the logic for gold failed?

From a traditional interest rate model perspective, the core anchoring variable for gold currently is "real interest rates (nominal rates - inflation expectations)."

TIPS data charts show that the recent 10-year TIPS have returned to above 2%, which historically corresponds to a pressured environment for gold.

Meanwhile, the US Dollar Index (DXY) remains above 100, also constituting a typical valuation suppression factor—theoretically, this combination creates a clear downward driver for gold.

② The actual price movement hasn't fully followed this logic, indicating gold is undergoing "pricing factor expansion."

· The first layer of change comes from central bank behavior.

Sustained net gold purchases by global central banks have shifted gold's marginal demand from "interest-rate-sensitive capital" to "reserve asset restructuring." This portion of demand is insensitive to real interest rates.

· The second layer of change comes from geopolitical and tail risk premiums.

Gold is reincorporating a "system uncertainty premium," including fiscal expansion, debt sustainability, and monetary credit reassessment, rather than simply being an inflation hedge.

· The third layer of change comes from structural financial mechanisms.

Gold ETFs and futures systems amplify short-term price elasticity, potentially causing periodic deviations between "paper gold pricing" and "physical marginal constraints."

Therefore, a more accurate statement is not "gold's logic has failed," but that the pricing framework has shifted from a single-factor (real interest rates) to a multi-factor (rates + dollar + central banks + credit risk) overlay model.

Under this framework, TIPS > 2% and a strong DXY only represent the "existence of a suppression factor," not a signal for the trend's end.

The key for gold is no longer whether it's cheap, but whether the global system still needs it as the ultimate credit anchor.

③ Gold price projection under the three-phase model since the war

In the "three-phase war model," gold typically begins to detach from real interest rate constraints during the "conflict diffusion - financialized pricing phase," entering a risk-premium-dominated range;

while in the "credit repricing phase," the market incorporates fiscal sustainability and central bank balance sheet expansion into the core of pricing.

The current situation is closer to the transition from the second to the third phase, explaining the structural reasons why gold faces short-term pressure under high TIPS and a strong dollar yet remains resilient. Simultaneously, sustained central bank gold purchases provide phased support for long-term gold prices.

For detailed analysis, please refer to the mind map.

Data sources: TradingEconomics, Investing

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Were there leading signals for Friday's market pressure?

Friday's sharp decline in U.S. stocks seemed sudden, but if you look at several signals together, it wasn't entirely without warning. What's truly worth paying attention to is not the index's daily movement, but the fact that market risk appetite had already begun to loosen before the drop.

·Signal One: The Turning Point of the SPX/VIX Ratio

The SPX/VIX Ratio can be understood as "S&P 500 strength divided by volatility pressure."

When the S&P 500 is still running at high levels, even continuing to hit new highs, but the ratio does not move in sync, it indicates that while the market is still rising on the surface, the underlying risk pricing has deteriorated.

This is completely different from looking at the index alone. If the VIX stops declining and even starts to rise, it means capital is paying a higher insurance premium for potential volatility.

In other words, risk has already been priced in advance in the derivatives market. A strong index does not equal strong risk appetite. When the SPX is still high, but the SPX/VIX Ratio weakens in advance, it often indicates that the quality of the rally is declining, and the market is entering a state of "high-level fragility."

·Signal Two: VIX is at a low level but has limited downside room

In a high-valuation environment, an excessively low VIX might actually signal that the market is overly relaxed.

The logic behind "when VIX is low, start trimming stocks" is: when volatility is suppressed to very low levels and the market is generally unconcerned about risk, one should instead be wary of insufficient risk premium.

The real buying opportunity is often not when the VIX is low, but after the VIX spikes rapidly. The low VIX phase may not be suitable for chasing rallies, while after a high VIX outbreak, it's time to start looking for opportunities to buy on dips.

·Signal Three: Sudden changes in macro interest rate expectations

Friday's market pressure wasn't just due to the so-called "IPO siphon effect." The more core trigger was strong employment data raising market expectations for the Fed to resume rate hikes.

The interest rate futures market began pricing in a higher probability of a December rate hike, which is particularly unfriendly to high-valuation markets.

For some time, the index, especially the Nasdaq and AI-related assets, have been able to maintain high valuations based on an important premise: the market's belief that interest rates have peaked. If employment data is strong, concerns about inflation stickiness resurface, and rate hike expectations reappear, the entire valuation framework needs to be repriced.

The chain is: strong employment → concerns about inflation stickiness → upward revision of rate hike expectations → rising U.S. Treasury yields → pressure on high-valuation assets → VIX rebound.

Therefore, Friday's decline was the result of both macro expectations and market structure.

The market has shifted from a phase of "strong index, low volatility, strong risk appetite" to a phase of "index still strong, but risk appetite beginning to weaken."

The most dangerous thing is investors still chasing rallies with the mindset of a bull market's tailwind phase.

·Friday's sharp decline indeed had leading signals

The three signals—weakening SPX/VIX Ratio, low-level VIX starting to rise, and rebounding rate hike expectations—collectively indicate the market has entered a high-level fragile zone.

Going forward, blindly chasing rallies is not advisable. Instead, one should wait for a more full release of panic before seeking better windows for buying on dips.

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Two market indicators are giving contradictory conclusions?

Recently, the S&P 500 hit new highs again. If you only look at the index, it's easy to conclude: US stocks are strong, the trend is fine.

The problem is, the market's true state often isn't in the index, but in its internal structure and sentiment indicators.

· The market is showing an interesting signal: prices are strong, sentiment is hot, but breadth is weakening.

① McClellan Oscillator

This indicator looks at market breadth. Simply put, it asks "how many stocks are rising together?"

According to the data, the S&P 500 continues to rise, even approaching new highs, but the McClellan Oscillator and the McClellan Summation Index are retreating.

This indicates a problem: the index is still rising, but the number of stocks participating in the advance may be decreasing.

· This is a classic case of "strong index, weak breadth."

In other words, the market appears strong on the surface, but the rally may be increasingly reliant on a few heavyweight stocks, rather than being driven by the majority of stocks.

This is especially important for weight-concentrated indices like the S&P 500 and Nasdaq 100:

Because as long as a few large-cap tech stocks are strong enough, the index can look great, but the internal market may not be truly healthy.

② Total Put/Call Ratio

This indicator looks at options market sentiment.

A higher PCR indicates more market fear; a lower one indicates more people buying calls to chase the rally, meaning more market optimism.

When the market fell in April, the Put/Call Ratio was once at a relatively high level, indicating heavy defensive sentiment among investors at that time.

But as the S&P 500 rebounded quickly, the PCR has declined significantly and has now returned to a low area.

This shows that market sentiment has changed: fear has receded, optimism is heating up, and investors are shifting from "fear of falling" to "fear of missing out."

③ Are these two signals contradictory?

Superficially contradictory, they essentially point to the same conclusion—the risk-reward ratio of the current market is declining.

· McClellan Oscillator signal: The internal quality of the rally is declining.

· Put/Call Ratio signal: Investors' chase-the-rally sentiment is heating up.

· Combined view: The market is becoming more optimistic, but the number of stocks actually participating in the rally is not increasing in sync.

This is not a typical bearish signal, nor does it mean US stocks are about to peak immediately.

The index can absolutely continue to rise, especially when heavyweight stocks remain strong. But it reminds us that the market is gradually entering a "sentiment-driven rally."

The former is healthier because many stocks are rebounding together; the latter is more fragile because the rally is increasingly dependent on sentiment and a few leaders.

For trading, the significance of this set of signals is: now is not the right position to chase the rally.

If you already hold index ETFs like SPY, QQQ, you can continue to respect the trend, but raise your risk awareness;

If you are in cash, in a phase where the index has risen consecutively, sentiment has clearly heated up, but breadth has started to diverge, chasing highs with heavy positions doesn't offer good value.

Watch for two changes next:

· If the S&P 500 continues to make new highs, can the McClellan Oscillator strengthen again?

· If the Put/Call Ratio continues to decline, will it enter a more extreme optimism zone?

If the three things—index rising, sentiment hot, breadth weak—continue to appear simultaneously, the probability of a short-term pullback or consolidation will increase significantly. The US stock trend remains strong, but the quality of the rally is declining, and the margin for error in chasing the rally is getting lower.

The real problem may not be inflation

When the market saw "US April inflation exceeded expectations" today, its first reaction was: rate cuts are off the table.

Breaking down the data reveals that this inflation episode is not as bad as the market imagined.

Combined with Bloomberg data, the current situation looks more like a "war-driven disruption" rather than a new round of a comprehensive inflation cycle.

· The most crucial information from the data is actually:

Headline CPI suddenly picked up, but core CPI did not explode in sync.

This means: the main issue with this inflation is not "overheating demand," but energy and some short-term disruptions.

① Energy Data

· April energy inflation MoM +3.8%

Although still high, compared to March's +10.9%, it has clearly cooled down.

The reason the market is sensitive is essentially still because of:

· Iran war risk

· Surging crude oil prices

· Gasoline price pass-through

· Rising jet fuel prices, which is a typical case of "geopolitical imported inflation."

In other words: this is not the US economy overheating again, but oil prices "adding drama" to CPI.

② Food inflation is high, but the problem is not systemic

· Food inflation MoM +0.5%. The most obvious are: beef, eggs, fish, chicken. This part is actually related to global supply chains, feed, and transportation costs.

Against the backdrop of war: energy → transportation → agricultural product prices will form short-term transmission.

The problem is: food and energy are inherently the most volatile parts of CPI. What the market truly cares about is core inflation.

③ The real key: Core goods inflation is not bad

· Goods inflation MoM 0%

· It was still 0.1% in the previous two months

This means: US consumer goods demand has not gone out of control again.

If the economy overheats for a second time, the first to blow up are usually core goods. For example: cars, home appliances, consumer electronics, durables.

This indicates: the current US economy looks more like "localized price increases" rather than a full-blown inflation spiral.

④ Other service data

· Medical care services: 0%

· Education services: 0.2%

· Recreation services: 0.1%

· Transportation services: 0.3% (significantly better than March)

Truly widespread service inflation has not gotten out of control. This is completely different from the level seen during the 2022 comprehensive inflation state.

⑤ The market's real reversal point also explains everything

If this inflation really "exploded," theoretically we should have seen:

· 2-year Treasury yield surging

· US stocks continuing to dive

· Rate cut expectations being pushed back significantly

But the actual movement was: after the 8:30 data release, the 2-year rate first went down, and US stocks first went up. This shows that the market initially considered the data "acceptable."

The real reversal happened after 8:42.

This means: the market decline is more likely due to sentiment trading, positioning issues, AI profit-taking at highs, and a short-term stampede in risk assets, rather than simply because inflation is out of control.

The April CPI data is essentially more like a war-type inflation disruption, not the economy overheating again.

What really needs to be watched now is actually:

· Whether oil prices will continue to surge

· Whether future rent data will be revised

· Whether core services inflation will pick up again

If the latter two items fall back again, then this inflation data is likely just the market "seizing on an excuse" in a high-valuation environment.

Data source: Bloomberg

Goldman Sachs & FactSet: U.S. Stock Earnings Expectations Accelerating Upward Revisions

Recent data from Goldman Sachs and FactSet provides a crucial signal: the driving force behind U.S. stock gains is gradually shifting from pure valuation expansion to earnings expectation revisions. 

In a high-valuation environment, the market fears most the "lack of fundamental support." If earnings expectations continue to be revised upward, then even with high index valuations, EPS growth on the denominator side can partially absorb valuation pressure. 

① Four sets of data on earnings expectations for major U.S. stock indices 

· The year-over-year EPS growth rate for the S&P 500 mostly remains in the mid-to-high single-digit to low double-digit range for 2024 and 2025. Entering 2026, the market consensus expectation has significantly increased. 

· In Q1 2026, the expected year-over-year EPS growth rate for the S&P 500 as a whole reaches about 25%. Even after excluding Amazon and Google's "other income," there is still about 16% growth. 

The earnings improvement does not rely entirely on a single accounting disturbance, nor is it just the short-term contribution of a few giants.

② One detail cannot be ignored 

Data (1) The "median company" is significantly lower than the overall index. The current earnings recovery of the S&P 500 still exhibits a clear concentration effect at the top, and the internal structure is not balanced. 

Data (2) further verifies positive signals from the corporate side. 

The proportion of S&P 500 companies providing next-quarter EPS guidance that is higher than the market consensus expectation has reached 45%, above the long-term average of 40%. The earnings upward revision is not just analysts unilaterally raising their models. 

· However, 45% is not an extreme high:

During the 2020-2021 recovery phase, this proportion approached or even exceeded 60%. The current situation is more like a moderately strong earnings recovery. 

③ The market's continuous upward revisions of future EPS 

According to data (3), from early 2026 to May, the S&P 500 EPS expectations for Q2, Q3, Q4 2026, and 2027 have generally been revised upward by about 5%-7%, while Q1 2026 even saw an almost vertical upward revision. 

· The underlying signal is very clear: 

The market is not trading on a single quarter's earnings beat, but is repricing the earnings path for the next several quarters. If this upward revision trend continues, the U.S. stock rally is entering a more solid phase of "earnings realization trading." 

④ The sources of earnings upward revisions are not even 

What's truly worth paying attention to is data (4): 

Over the past month, the industries with the strongest FY2 EPS revision breadth have mainly been concentrated in Energy, Information Technology, and Industrials. Energy has the highest revision breadth, Information Technology is clearly leading the broader market, and Industrials also maintain positive improvement.

This indicates that the current U.S. economy is not in a broad-based expansion. This round of earnings revisions is more like a structural rally driven by AI capital expenditure, energy sector strength, and industrial order recovery. 

Therefore, judging the U.S. stock market cannot rely solely on the index level.

The real risk lies in the fact that market expectations have already started to rise. The most important variable for the current market has shifted from "will interest rates be cut" to "can earnings continue to be revised upward." 

⑤ Focus on three key things: 

· Will S&P 500 EPS expectations continue to be revised upward; 

· Will corporate earnings guidance remain strong; 

· Can the earnings recovery spread from Technology and Energy to more sectors. 

As long as these three points do not show a significant reversal, the high valuation of U.S. stocks still has some support. 

Data source: Goldman Sachs, FactSet

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Is the semiconductor sector overbought?

① Three clues to judge: credit risk, technical momentum, and industry weight.

Data 1 shows: HYG, SPY, QQQ, and SMH are rebounding in sync, with the most critical point being that HYG is not weakening. High-yield bonds typically reflect credit risk appetite, and a strong HYG indicates the market is not currently pricing in systemic credit pressure.

In this environment, capital is re-entering risk assets, SPY is recovering, QQQ is stronger, and it's not surprising that SMH, as the most elastic direction within tech growth, is leading the gains.

This shows the semiconductor rally is not an isolated event, but a typical risk-on trading chain: easing credit risk → recovery in equity risk appetite → growth stocks outperform → semiconductors lead the rally.

② The SOX semiconductor index has entered a short-term overheated zone.

Data 2: The 14-day RSI is near historically high levels, and the proportion of overbought component stocks has also risen significantly, meaning momentum is spreading within the sector and capital crowding is increasing.

In other words, semiconductors are not experiencing a weak rebound, but a strong trend; however, continuing to chase the rally at this level has reduced the short-term risk-reward ratio.

· Overbought does not equal a top: Strong-trend assets often continue to operate within high RSI ranges. What truly needs vigilance is not the RSI itself, but whether, as prices hit new highs, sector breadth deteriorates, leaders stagnate, or earnings expectations are revised downward.

If these signals do not appear simultaneously, judging a top simply based on "having risen too much" can lead to exiting too early.

③ The market cap weight of the US semiconductor sector has risen to a historical extreme, even surpassing highs around 2000. Data 3 provides a longer-term structural signal, indicating the market has repriced semiconductors from a traditional cyclical industry to a core infrastructure asset of the AI era.

The logic behind it is not complicated:

Continued expansion in cloud provider capital expenditure drives demand for GPUs, ASICs, HBM, advanced packaging, foundry services, and semiconductor equipment, ultimately reflected in the market cap expansion of leading companies like NVIDIA, TSMC, Broadcom, AMD, and ASML.

④ The rise in semiconductor weight is essentially a systemic revaluation of the AI industry chain. Market consensus is already very concentrated.

Semiconductors are both the strongest theme in the current US stock market and one of the most crowded trades. When a sector's weight, valuation, and sentiment are all at high levels, any rise in interest rates, credit disturbances, cooling AI capital expenditure, or underperformance of leading companies' earnings can amplify volatility.

· Semiconductors are overbought in the short term, but cannot be simplistically defined as having peaked in the medium term.

A more accurate current assessment is: Semiconductors are in a "hot, strong trend" phase. The trend remains, but the risk-reward ratio has declined; the theme is intact, but volatility risk has risen.

For existing positions, the key is not to exit immediately because the RSI is high, but to reduce leverage, control position size, and monitor HYG, the 50-day moving average, and leading companies' earnings expectations. For those not invested, it's not suitable to chase the rally emotionally now; more reasonable opportunities come from confirmation of support after a pullback.

Semiconductors are hot, but not broken yet. What truly determines an inflection point in the market is not overbought conditions themselves, but whether credit risk, AI capital expenditure, and leading companies' earnings expectations reverse.

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$2x Long VIX Futures ETF(UVIX.US) This trend is simply toxic

What does a VIX backwardation mean?

VIX backwardation refers to a situation where the price of near-month VIX futures is higher than that of farther-month futures, meaning the term structure has shifted from the common "contango" to "backwardation".

① A significant signal has recently emerged in the market:

The near-month VIX futures have turned into a premium relative to the next-month futures, with the term structure entering backwardation. This is usually not ordinary volatility, but rather the market starting to pay a higher premium for "immediate risks".

Cboe's explanation of the VIX term structure also points out that VIX futures are in contango most of the time. The curve only inverts significantly when short-term risks are sharply re-evaluated.

② Looking at the context this time, the triggering factors are not singular.

In early March 2026, U.S. stocks faced energy shocks from escalating Middle East conflicts, with oil prices surging sharply within a week, U.S. crude oil rising above $90, and disruptions to shipping in the Strait of Hormuz.

On the other hand, U.S. employment data weakened, and the market began to worry about dual pressures of "slowing growth + resurgent inflation". Reuters reports showed that the S&P 500 closed lower on March 6, with the VIX rising to its highest level since April 2025.

This is also why, when looking at charts alone, backwardation cannot be simply understood as "the market is about to crash". Its more accurate meaning is: short-term panic has entered a stage of concentrated pricing.

Whether it's VX1-VX2 turning positive again, or "the spread of the highest VIX futures contract relative to the spot VIX" falling below zero, the essence is the same thing – the focus of market trading has shifted from long-term uncertainty to the immediate shocks themselves.

③ Historically, such signals often have two implications:

· First, before short-term risks are cleared, volatility products have the greatest elasticity, because the rise in near-month VIX futures combined with an improving term structure will make products like UVIX more sensitive than usual.

· Second, for the spot market, it often approaches an extreme sentiment zone instead. Cboe's past research also mentions that VIX entering backwardation often corresponds to a market stress phase, but it may not necessarily continue a one-sided decline afterwards. Many times, after panic is released, the market quickly enters a recovery phase.

④ When VIX shows backwardation, what's truly worth paying attention to is not "whether one can bottom-fish immediately", but two things:

· First, whether the inversion continues to deepen;

· Second, whether risks continue to spread to the levels of credit, liquidity, and earnings expectations.

If high oil prices, geopolitical conflicts, and growth concerns resonate, backwardation may persist longer;

But if the marginal impact of events eases, it often means the most intense panic trading has already been priced in by the market in advance. This is also the most critical judgment watershed for the current market.

Data source: 2026.Mcclellan Financial Publications

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Winner winner, Fish dinner😋

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$SPDR Gold Shares(GLD.US)

Watch more, act less.

Gold records the biggest gain of the day

During today's post-market review, the most eye-catching wasn't the Nasdaq or the "Magnificent Seven," but gold ETFs becoming the star of the day's gainers list.

In a market where macro narratives can shift at any moment, gold—this "old asset"—suddenly stepping into the spotlight usually isn't because it's become sexy, but because capital is repricing risk.

In trading terms, a gold ETF rally typically signals three things: falling real interest rates, a weaker dollar, and rising safe-haven demand. In the current environment, these three aren't mutually exclusive.

Market interpretations of economic data are becoming increasingly "binary": strong data raises fears of continued tight policy; weak data sparks growth slowdown concerns. So capital is choosing a smarter way to express views—buy certainty first, then consider offense. Gold ETF's leadership looks more like "reinforcing defense first."

What I focus on more is the logic behind its capital flows: If gold's rise is just short-term news-driven, it's usually a big bullish candle that fades; but if it's asset reallocation, it shows as steady uptrends, shallow pullbacks, and amplified but calm volume. Today's strength looks more like the latter: the market isn't betting on an event but preemptively buying insurance against "uncertainty."

In my framework, gold is never for chasing rallies—it's more like a portfolio's "volatility adjuster." When equities are in high valuation zones and volatility could spike anytime, gold's value isn't outperformance but preventing portfolios from spiraling when mistakes happen. Especially when stock-bond correlations turn unstable again, this "third asset" gets remembered.

Of course, gold's surge could also be a reminder: the market is tagging the future—inflation isn't dead, rate-cut expectations waver, geopolitical risk premiums return. These tags may not materialize immediately, but once capital pays for them, prices move first.

Tomorrow's key watchpoints are clear:

1) Whether gold holds today's gains without giving them back;

2) Whether the dollar and Treasury yields move in sync;

3) Whether risk assets show structural fatigue—"struggling to rise but quick to fall."

If gold stays strong while equities hesitate, it's not "gold rising" but the market saying: "I'm uncertain, so I'm defending first." That speaks louder than any news.

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