Solid Goold Trading

Monday’s Edition

With Nick Goold

It was a strong week for equities, with the Dow moving above 50,000 and the Nikkei 225 jumping after Sanae Takaichi secured a clear majority. Improved political clarity in Japan helped lift market sentiment.

Gold started the week lower as selling continued from the previous period of volatility. However, once market pressure eased, buyers returned and prices moved back toward the $5,000 level. Bitcoin, in contrast, had a weak week, as speculators sold following its recent poor performance, raising doubts about its role as an alternative asset.

There were few major economic data releases. U.S. employment data was delayed to this week, while U.S. manufacturing data surprised to the upside. The Bank of England and the ECB both kept interest rates unchanged, while the Australian central bank raised rates by 0.25%.

Markets This Week

U.S. Stocks

Technology stocks were under pressure, but the Dow finished the week strongly above 50,000 as investors bought large, established companies. The U.S. economy remains stronger than expected, and lower interest rates continue to support these stocks. Despite the Dow reaching record highs, the uptrend is not very strong, so short-term traders may find better opportunities in range trading. Medium-term traders may still look for higher levels and consider buying on dips. Resistance is seen at 50,500, 51,000, 51,500, and 52,000, while support is at 49,500, 48,500, and 48,000.

Japanese Stocks

Japanese stocks reacted positively to Takaichi’s victory and her party securing a majority, as markets expect continued government support for the economy and a weaker yen. In the short term, the market looks overbought, so some pullback or sideways movement is possible. However, once this consolidation is complete, the medium-term outlook remains positive as policies aimed at supporting growth are expected to continue. Resistance is seen at 59,000円, 60,000円, and 61,000円, while support is located at 55,000円, 54,000円, 53,000円, and 52,000円.

USD/JPY

USD/JPY had a strong week as traders bought the pair ahead of the expected election victory by Takaichi. Recent comments from Takaichi suggesting she is not opposed to a weaker yen supported further buying. However, the market is now trading close to recent highs, where the risk of Bank of Japan intervention increases. As a result, the pair may move sideways in the near term as gains are consolidated. Resistance is seen at 158, 159, 159.5, and 160, while support is located at 155, 154, 153, and 152.

Gold

Gold saw further stop-loss selling on Monday as panic selling continued, but prices recovered through the rest of the week as investors continued to value gold highly amid elevated geopolitical risks and concerns over government finances. Volatility remained high, with the $5,000 level acting as key resistance. Technical indicators now point to sideways movement, and with gold still up more than 10% this year, range trading may be the preferred approach in the near term. Resistance is seen at $5,050, $5,100, $5,200, $5,500, and $5,600, while support is located at $4,800, $4,650, $4,600, and $4,500.

Crude Oil

WTI crude continued to test higher levels last week but failed at resistance as tensions in Iran eased. The weekly close below the 10-day moving average suggests the recent uptrend has paused for now. As a result, the market may move lower, with prices likely to trade in the $66.50 to $60 range in the near term. Resistance is seen at $66.50, $70, and $75, while support is located at $60, $55, and $50.

Bitcoin

Bitcoin fell sharply last week as speculators sold after being disappointed with its recent performance compared to gold, leading some to question its role in the financial system. Prices rebounded quickly from the $60,000 area, as many investors still believe in Bitcoin, noting that large drops in the past have often been followed by strong gains. However, as long as Bitcoin remains below the 10-day moving average, the short-term bias remains lower. A move back above the 10-day moving average could trigger a sharp rebound. Resistance is seen at $75,000, $80,000, $85,000, and $95,000, while support is located at $65,000, $60,000, and $55,000.

This Week’s Focus

Monday: Japan Current Account
Tuesday: U.S. Retail Sales
Wednesday: China CPI and PPI, U.S. Nonfarm Payrolls
Thursday: U.K. GDP, Industrial Production and Trade Balance, U.S. Existing Homes Sales
Friday: E.U. GDP and Trade Balance, U.S. CPI

Japanese markets are set to be in focus following the Takaichi government securing a majority, with attention turning to yen weakness and its impact on equities. In the U.S., retail sales and employment data are the key events this week and are likely to influence all major markets. Gold and Bitcoin will also be closely watched as both attempt to recover recent losses amid ongoing volatility.