The global asset market has experienced a significant divergence in performance, with gold experiencing a decline of nearly 1% to $4,448.19 per ounce on March 30. Meanwhile, crude oil surged more than 1%, marking a sharp contrast between the two assets.
The underlying cause of this divergence is attributed to supply-side pressures on oil, which are being driven by geopolitical tensions and threats to close the Strait of Hormuz. This has led to a surge in inflation expectations, which in turn strengthens the dollar and puts pressure on gold as it offers no yield and is priced in dollars.
The impact of this divergence can be seen across various asset classes, including equities and cryptocurrencies. European equity indices have declined, with the Europe 50 index falling by 1.82%. The Crypto Fear & Greed Index has reached Extreme Fear territory, indicating a high level of bearish sentiment in the market.