Precious metals have once again attracted market attention today, with gold breaking above the 4.2K resistance that capped the upside for the past six weeks. If you have followed our charts closely, you know that 3.9-4.0K has been a solid support area for the past two months, so this rally is not surprising. The ideal scenario where gold being dumped to 3.7-3.8K did not materialize as oil cooled and yields came off their highs.
For traders riding the rally, trail your stops. 4K is very likely the low, although there remains a small chance of a retest of 4K if Trump escalates. For this rally to evolve from a tactical bounce off support into a genuine bullish trend reversal and open the door to further upside, gold still needs to reclaim 4.4K. XAGUSD62.035 also needs to reclaim 64-65.
GDX83.77 has been showing promise since yesterday. It broke a key descending trendline resistance yesterday and is now testing another major resistance from below. Ideally, we want XAUUSD4247.41, silver, and GDX to line up before calling a real trend change.
It's increasingly apparent that our call on 601899 at 25 back in June was yet another surgical call to add to our track record, as I wrote in Tactical Positioning | Week of 06.22, "601899 broke... A bounce is very likely here."
On the macro side, $DXY has backed off its high, which is also providing some short-term support for precious metals. However, look closely at USDJPY157.74. It failed to break and hold below 155. The chart is also a reminder of how important technical analysis is. TA is built purely on past PA and human behavior, yet it can reveal information that fundamental analysis often misses. Why? Because big players use TA too. The recent USDJPY action shows Bessent respected our levels while painting the chart in the past few sessions as if Trump had handed them over himself.
As I have said before, for an intervention to have a sustained effect, policymakers need to engineer a self-reinforcing spiral. In USDJPY, that means buying yen hard enough to force yen shorts into capitulation. 155.55 is the minimum level to monitor. If they fail to deliver that, we should see a gradual climb back toward 160 and eventually another ATH, because USDJPY fundamentals are now almost entirely dependent on oil prices, with oil inventories appearing to be at their lowest level since the 1970s.
The same logic applies to gold and silver. The Iran war is far from over. Oil has pulled back from its high as expected, but the lower oil falls, the greater the chance that Trump calls for another strike or escalation. If that happens, yields could explode and precious metals could be dumped. I have also said that, when the time comes, precious metals can rally alongside rising yields, and that happens when investors lose faith in the major currencies. We are not there yet.
Equities are down today, just as I warned at yesterday's close. On SPX7723.55, price reversed from the ascending trendline resistance that we used to call the top in early June. NDX also reversed from a key descending trendline, inflicting pains on those who ignored my warnings.