Solid Goold Trading

Monday’s Edition

With Nick Goold

The Dow Jones Index reached new record highs last week as strong company earnings and continued buying of AI-related stocks lifted market confidence. Reports that the Strait of Hormuz could reopen also helped improve sentiment and pushed oil prices lower. Gold moved sharply higher after U.S. employment data showed employers cut 23,000 jobs in July, much weaker than expected and a sign that the U.S. economy may be slowing.

The U.S. ISM Manufacturing PMI was stronger than expected, showing that the manufacturing sector is holding up better than many investors had expected. Markets also continued to watch the impact of the recent coordinated currency intervention by Japanese and U.S. authorities, the first joint intervention in 15 years, which supported the Japanese yen.

Japan's Cabinet also approved a plan to reduce the consumption tax on food products from 8% to 1% for two years starting in April 2027. The measure, proposed by Prime Minister Sanae Takaichi, is designed to help households cope with higher living costs and encourage consumer spending.

Markets This Week

U.S. Stocks

The Dow Jones Index surprised many traders by reaching new record highs as positive sentiment returned to the stock market. The trend has turned higher, with the 10-day moving average now rising. Previous resistance around 53,000 is expected to act as support, making buying on pullbacks the preferred strategy this week. Resistance levels are at 54,500, 55,000 and 56,000. Support is seen at 53,000, 52,500, 51,500, 51,000 and 50,000.

Japanese Stocks

The Nikkei 225 moved above its recent downtrend as buyers returned to the market. Even though the Japanese yen remained strong, investors no longer saw this as a major negative. Concerns about U.S. government finances also appeared to have already been priced into the market. Technical indicators have not yet confirmed a new uptrend, so the index may continue to trade in a range. For short-term traders, buying near support and selling near resistance may be the best strategy this week. Resistance is at 67,000, 68,000, 69,000 and 70,000. Support is at 64,000, 63,000, 62,000, 61,000 and 60,000.

USD/JPY

USD/JPY fell sharply to around 155 after the United States and Japan confirmed they had carried out a joint currency intervention. Buyers returned later in the week as traders continued to focus on the large interest rate difference between the U.S. and Japan. Even after weak U.S. jobs data caused an initial sell-off, USD/JPY quickly recovered, showing strong buying interest at lower levels. The pair may continue to move higher this week, although the falling 10-day moving average could slow gains later in the week. Resistance is at 159.00, 160.00, 161.00, 162.00, 164.00 and 165.00, while support is at 157.00, 156.00, 155.00 and 154.00.

Gold

Gold surged higher last week as lower oil prices, continued buying by central banks, and weaker-than-expected U.S. employment data increased demand for safe-haven assets. Gold has traded quietly for several weeks, and last week's strong move could be the start of a new uptrend. In the short term, however, the market is becoming overbought, so short-term traders may find better opportunities by selling rallies. Medium-term traders should be cautious about selling and may find better buying opportunities on pullbacks toward the rising 10-day moving average. Resistance is at $4,400, $4,500 and $4,600, while support is at $4,200, $4,150, $4,050, $4,000 and $3,950.

Crude Oil

WTI crude oil started the week lower after the United States and Iran resumed talks, reducing concerns about supply disruptions. Selling continued through most of the week as traders became more confident that tensions in the Middle East would not get worse. Oil prices are still likely to remain volatile, but selling near the 10-day moving average may be the better strategy this week. Resistance is at $80, $90, $95, $100 and $105, while support is at $75.00, $67.50, $65.00 and $60.00.

Bitcoin

Bitcoin tested the $65,000 resistance level last week as stronger U.S. stock markets improved confidence in risk assets. Buyers were not able to break above this level, but buying interest remains strong. A break above $65,000 this week could lead to more buying, so looking for buying opportunities may be the better strategy. Resistance is at $65,000, $75,000, $80,000, $85,000 and $90,000, while support is at $60,000, $55,000 and $50,000.

This Week’s Focus

Monday: Japan Current Account
Tuesday: Australia RBA Interest Rate Decision, U.S. Existing Home Sales
Wednesday: Japan Reuters Tankan Index, U.S. CPI
Thursday: Japan PPI, U.K. GDP and Industrial Production, E.U. Industrial Production, U.S. PPI
Friday: E.U. GDP and Trade Balance, U.S. Retail Sales and Michigan Consumer Sentiment

Another busy week is expected as traders watch U.S. inflation data, with the CPI and PPI likely to have a big impact on all markets. Markets will also follow the ongoing U.S.-Iran talks and any progress on reopening the Strait of Hormuz. Other key events include U.S. Retail Sales and the Michigan Consumer Sentiment Index, while traders will also be watching to see if Japanese authorities carry out any further intervention to support the yen.