Solid Goold Trading

Monday’s Edition

With Nick Goold

Gold and Bitcoin surged after the U.S. Treasury announced it would double the size of its long-term bond buybacks from $2 billion to at least $4 billion per operation. This was important because the move pushed bond prices higher and weakened the U.S. dollar. Gold jumped sharply, while Bitcoin broke out of its recent range and rose around 20%.

Major U.S. and Japanese stock indexes finished the week lower as investors became more cautious. High bond yields, U.S.-Iran tensions, and weakness in AI and semiconductor stocks hurt sentiment. Higher WTI crude oil prices were also negative for Japan, as more expensive energy can increase costs for Japanese businesses.

WTI crude oil rose as U.S.-Iran tensions increased, including the possibility of new U.S. economic sanctions on Iran. Meanwhile, the Fed’s July meeting minutes showed that officials expect inflation to slow, but another rate hike could be needed if inflation remains high.

Markets This Week

U.S. Stocks

The Dow started the week below the 10-day moving average, encouraging further selling throughout the week. Higher WTI crude oil prices and concerns about the U.S. bond market added to the weakness. The market is now in a short-term downtrend, so selling strength around the 10-day moving average could be the preferred strategy this week. Resistance levels are at 53,500, 54,000, 54,500, 55,000 and 56,000. Support is seen at 52,500, 51,500, 51,000 and 50,000.

Japanese Stocks

The Nikkei lost all of the previous week’s gains as higher WTI crude oil prices worried investors, while weaker-than-expected Japanese GDP added to the negative sentiment. The market is likely to trade sideways to lower this week, with the 10-day moving average flattening and prices near the middle of the Bollinger Bands. Traders will also focus on the possibility of a Bank of Japan interest rate hike next month. Resistance is at 67,500, 69,500, 70,000 and 71,000. Support is at 65,000, 64,000, 63,000 and 62,000.

USD/JPY

USD/JPY moved higher early last week as WTI crude oil prices rose, but the surprise increase in U.S. government bond purchases weakened the U.S. dollar midweek and pushed the pair lower for the week. With resistance near the upper Bollinger Band and the market closing below the 10-day moving average, USD/JPY could trade sideways to lower ahead of important U.S. data on Wednesday, which will likely provide direction for the rest of the week. Resistance is at 159.50, 160.00, 161.00, 162.00, 164.00 and 165.00, while support is at 158.50, 158.00, 157.00, 156.00, 155.00 and 154.00.

Gold

Profit-taking pushed gold lower at the start of last week, before the surprise increase in U.S. government bond purchases led to strong buying from longer-term investors worried about the future value of the U.S. dollar. Buying continued into the end of the week, keeping the medium-term uptrend very strong. The upper Bollinger Band is now acting as short-term resistance, so short-term traders could look to sell if prices start to weaken. Medium-term traders may prefer to follow the uptrend and wait for a move closer to the 10-day moving average before buying. Resistance is at $4,650, $4,700, $4,775, $4,900 and $5,000, while support is at $4,450, $4,350, $4,300, $4,225, $4,200, $4,125 and $4,100.

Crude Oil

WTI crude oil moved higher throughout last week as the U.S. threatened new economic sanctions against Iran and discussed taking control of the Strait of Hormuz. Oil largely ignored weaker U.S. economic data, which could reduce demand. News headlines can still quickly change the market direction, but for now, higher prices look more likely this week. Resistance is at $90, $95 and $100, while support is at $80, $75, $67.50, $65 and $60.

Bitcoin

Bitcoin finally came back to life last Wednesday after the U.S. Treasury announced plans to increase its long-term bond buybacks. This weakened confidence in the U.S. dollar and increased interest in alternative assets such as Bitcoin. President Donald Trump also called for faster progress on crypto legislation, adding to the buying. While the outlook has improved, Bitcoin looks overbought in the short term and could move lower this week. A pullback toward $67,500–$70,000 could offer a medium-term buying opportunity. Resistance is at $80,000, $85,000, $90,000, $95,000 and $100,000, while support is at $65,000, $62,000, $60,000, $55,000 and $50,000.

This Week’s Focus

Monday: None
Tuesday: Australia RBA Meeting Minutes, Japan BoJ Core CPI, U.S. Building Permits, CB Consumer Confidence and New Home Sales
Wednesday: U.S. Core PCE Price Index, GDP and Durable Goods Orders
Thursday: Australia Private New Capital Expenditure, E.U. ECB Publishes Account of Monetary Policy Meeting, U.S. Jackson Hole Symposium
Friday: Japan Tokyo Core CPI, Unemployment Rate, U.S. Michigan Consumer Sentiment

WTI crude oil will remain in focus early in the week as the U.S. increases pressure on Iran. Markets will also watch whether gold and Bitcoin can continue their recent strong rises and whether selling pressure on stock markets continues. Attention will then shift to major U.S. data on Wednesday, followed by the Jackson Hole meeting from Thursday, where comments from Fed officials on inflation and interest rates could move markets.