Trading Desk

XAUUSD has not broken free of yields and the dollar. The rejection at 4.4K has now been followed by a break of the rebound's ascending trendline. That is consistent with the warning I have repeated over the past few months: persistent energy pressure can keep yields rising and gold under pressure, even with geopolitical safe-haven demand.

I expected a meaningful rebound in U.S. Treasuries across the curve this week as US2Y and US10Y approached major resistance, and therefore expected a strong push higher in gold. The bond rebound arrived later in the week, with 2-year and 10-year yields shedding 26bp and 18bp, respectively, from their highs at one point on Friday. Gold, however, had already sold off sharply on Monday, breaking down from its ascending triangle as the range tightened.

If the war follows the prolonged path I expect, a break below the July low remains in play. For now, watch 4.1K, followed by the strong support zone around 3.9–4K.

META

NIKKEI resolved higher as the wedge compressed. The latest prime-broker flows show renewed buying in Japanese semiconductors and AI infrastructure, even as overall risk appetite remains restrained, in line with the U.S. equity market.

BZ1!The crude shortage is easing. Crude shipments through the Strait of Hormuz have recovered to above 80% of pre-war levels. Saudi Arabia is moving more barrels out by taking on the transit risk through Hormuz and transferring cargoes to buyers' vessels off Sohar, Oman. The partial restoration of its East-West pipeline has also revived exports through Yanbu on the Red Sea, bypassing the strait. Refined-product flows continue to lag. Brent remains inside its rising channel.

As I have repeatedly noted, Iran and Iranian-backed military groups have yet to deploy their full capabilities against shipping and oil production facilities. Despite the recovery in crude flows, I doubt Iran will give up its leverage over oil prices. Once prices fall, it will find ways to disrupt shipping or production again.

Trump's TACO talk and fake-news headlines have become noticeably more frequent over the past two weeks. Yet even alongside the announcement of the final SPR release before reserves reach their operating floor, crude's downside has been limited. At its lowest, spot Brent was only about $10 per barrel below the high from two weeks earlier.

DXYLong-end yields remain firm and the war continues to raise energy costs abroad. DXY has pushed through 101.725 despite the weaker jobs report. My view remains constructive while that breakout holds.

RB1!Gasoline is keeping the pressure on consumers. RBOB has returned to 3.30, while US gasoline inventories fell another 1.7mn barrels and remained 7% below their five-year average.

GOOGL

GDXI said during the August rally that I did not like the gaps GDX was leaving behind. The downside path is now playing out, with GDX below its ascending trendline and 92.4, and moving back into the August gaps. If our view on the war is correct, persistent energy pressure will keep upward pressure on yields and weigh on gold despite geopolitical safe-haven buying. Gold could still break below its July low. If that happens, I expect GDX to fill the remaining August gaps.

VIXPositioning estimates show elevated systematic equity exposure while discretionary positioning has weakened. That leaves the market vulnerable to an unwind if volatility turns higher.