We keep our gold forecasts unchanged but see increased risk of near-term consolidation. Structural support from central bank demand and reserve diversification remains intact, while a softer oil profile or renewed dovish Fed expectations would be key catalysts for renewed upside.

Christopher Wong
Executive Director,
FX Strategist,
OCBC Group Research,
OCBC

Oil

The US has extended the ceasefire indefinitely but flows through the Strait of Hormuz remain heavily restricted, keeping global oil supply tight. Saudi Arabia and the UAE have increased pipeline exports to bypass the Strait, though these only partially offset lost seaborne volumes.

Physical markets are extremely tight, with dated Brent trading far above front‑month ICE Brent. Although the spread has narrowed from peak levels near US$35/barrel, it still signals acute near‑term scarcity.

Even if the Strait reopens, supply normalisation is likely to be slow. We maintain our US$100/barrel Brent forecast through mid‑year but now expect a more gradual easing in 2H2026, with year‑end prices around US$80/barrel. Restarting shut‑in production will take time, particularly for low‑pressure and heavier crude fields in Iraq and Kuwait.

Recent disruptions have also pushed energy security higher on the policy agenda, reinforcing strategic stockpiling and supporting demand.

Precious Metals

Gold

In April, gold struggled to regain upside momentum despite heightened geopolitical risk. Tensions around Iran and the Strait of Hormuz drove oil prices above US$120/barrel, refocusing markets on inflation, real rates and the Fed outlook. With higher energy prices complicating the inflation picture and FOMC signals pointing to a divided Committee, markets pushed out expectations for the first Fed rate cut to mid-2027.

While the Hormuz standoff has sustained a geopolitical risk premium, higher oil prices have lifted the US Dollar and yields, weighing on gold. As a result, gold has traded more like a macro risk proxy than a pure safe haven. Near-term upside would likely require easing geopolitical risks, softer oil prices and a more dovish Fed repricing.

We keep our gold forecasts unchanged but see increased risk of near-term consolidation. Structural support from central bank demand and reserve diversification remains intact, while a softer oil profile or renewed dovish Fed expectations would be key catalysts for renewed upside.

Silver

Silver traded firmer in April but failed to sustain upside momentum and softened toward month‑end as macro conditions turned less supportive. Unlike gold, silver was driven less by safe‑haven flows and more by whether tight physical balances could offset higher rates and a weaker industrial outlook.

The market remains structurally undersupplied, with the Silver Institute projecting a sixth annual deficit in 2026 and physical investment demand nearing a three‑year high. However, demand is becoming less supportive: industrial fabrication is expected to fall around 3% due to solar PV (photovoltaic) thrifting and substitution, while high prices continue to depress jewellery and silverware demand.

This leaves silver vulnerable to profit‑taking when Fed cut expectations are pushed out. Rising oil prices in late April reinforced these pressures by reviving inflation concerns. Near term, a clearer pickup in investor demand or a softer US Dollar and US rates backdrop may be needed for a decisive break higher.

Currency

US Dollar (USD)
Uncertainty remains over when the Strait of Hormuz will reopen and how long the energy shock will persist. Hopes of a Middle East de-escalation has lifted risk assets and high-beta currencies, even as oil prices briefly hit new highs in April. Strong US equity performance – led by AI – has further eroded the USD’s safe-haven appeal. A de-escalation in US‑Iran tensions would likely soften the USD, and we still expect a mild depreciation in 2H2026, though our conviction has faded.

The April FOMC signalled a clear hawkish shift amid resilient US data. Chair Jerome Powell noted the Committee is moving toward a more neutral stance, following three dissents against maintaining dovish guidance. While a renewed hiking cycle would support the USD, it remains unlikely under the new Chair.

Meanwhile, the rotation out of US equities has stalled. Strong, tech-driven earnings continue to drive US outperformance, with technology investment likely to cushion the drag from higher energy costs. As long as US equities lead, the USD’s downside should be limited.

Oil prices are also likely to remain elevated. Infrastructure damage and precautionary stockpiling should support prices even if the Strait reopens. We now expect Brent to end the year near US$80 per barrel, up from US$70 previously. The risk of higher-for-longer energy prices favours net energy exporters like the US over importers such as the euro area, further reducing our confidence in a bearish USD view for 2H2026.

Japanese Yen (JPY)
The sharp USD/JPY pullback after breaking above 160 drew market attention and likely reflected genuine JPY-buying intervention, amplified by thin Golden Week liquidity. Defending the 160 level will require larger-scale action, particularly if oil prices remain elevated. Further intervention could push USD/JPY into the 150–155 range, providing near-term support for Asian currencies.

Even so, we remain cautious and maintain our end-2026 USD/JPY target of 155. A June BOJ hike appears likely, but policy remains behind the curve, limiting sustained JPY support.

Asia ex-Japan
Asian ex‑JPY currencies weakened into end‑April as the earlier relief rally faded, led by the Philippine peso (PHP), Indonesian rupiah (IDR) and Thai baht (THB). Higher oil prices remain the key headwind, with the prolonged US‑Iran standoff increasingly at risk of becoming a sustained terms‑of‑trade and inflation shock rather than a temporary geopolitical event. Pressure was compounded by a more divided and hawkish‑leaning FOMC, as oil‑related inflation risks drove a hawkish repricing. Fed funds futures no longer price a full rate cut through mid‑2027, keeping USD support intact and limiting scope for broad AXJ relief rallies.

This backdrop should weigh most heavily on oil‑sensitive currencies – particularly PHP, THB, IDR and the Indian rupee – via adverse terms‑of‑trade effects, inflation and growth concerns. That said, AXJ performance is unlikely to be uniformly negative. The Singapore dollar (SGD) and Malaysian Ringgit (MYR) should remain relatively resilient, supported by a tighter policy stance and energy‑linked buffers, respectively. The renminbi (RMB) remains guided by steady fixings, while the Korean Won (KRW) and Taiwan Dollar (TWD) may continue to find support from the AI and export cycle. Overall, we expect any AXJ rebound to be selective and uneven, with oil prices, USD momentum and the RMB fixing key variables to watch. Reflecting this, we have revised IDR and PHP weaker, and KRW, TWD, Chinese Yuan, MYR and SGD firmer.

Singapore Dollar (SGD)
The SGD has remained relatively resilient, continuing to trade as a regional defensive currency, though it is not insulated from broader macro forces. The latest FOMC outcome highlighted policy division and caution, while higher oil prices amid persistent Middle East tensions have sustained concerns over inflation, delayed Fed easing, a firmer USD and potential growth risks.

This mix still favours the SGD on a relative basis versus some Asian peers, reflecting its lower‑beta profile and the MAS’s tighter policy stance. Even so, the SGD is not immune: higher oil prices and rising risks of softer global growth could still weigh on it against the USD.