Today’s data presents a picture of resilience that sits somewhat uneasily alongside the geopolitical backdrop, with U.S. retail sales rising by 1.7% in March, comfortably ahead of expectations and reinforcing the view that consumer demand remains strong, and that the Federal Reserve may have less urgency to cut rates than markets had previously assumed.
In more typical conditions, that would have placed clearer downward pressure on gold, yet the reaction has been limited, with prices easing only modestly while continuing to hold near historically elevated levels around $4,700–$4,800, suggesting that while interest rate expectations still matter, they are no longer the sole driver of the market.
At the same time, oil remains elevated because supply is increasingly uncertain, with disruption in the Strait of Hormuz continuing to constrain flows through one of the most critical energy corridors in the global economy.
What this points to is a growing divergence between financial signals and physical reality, as markets attempt to price a combination of economic strength and geopolitical disruption, while the underlying system adjusts far more slowly, constrained by logistics, infrastructure and the simple fact that supply chains do not move at the speed of markets.
This lag is important, because much of the oil and associated inputs currently being consumed still originates from shipments that left the Gulf before the conflict escalated, with the final pre-war cargoes only recently arriving, meaning the system is yet to fully absorb the impact of reduced flows. As those buffers begin to diminish, the effects are unlikely to remain confined to energy, but will extend into fertiliser, agriculture and ultimately food, where the consequences emerge more gradually but are often more persistent.
This is the focus of today’s video, where we examine how a physical shock moves through the commodity system, and why its most significant effects may not appear first in markets, but in the real economy.
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