The June inflation report came in soft, softer than anyone expected, and gold jumped on it.
I am not going to pretend otherwise. Headline prices fell 0.4% on the month against a forecast of minus 0.1%, core came in flat against plus 0.2%, and the annual rate dropped to 3.5% from 4.2%. That is a genuine cooling, not a headline trick, and gold did what it does when the rate story softens. It rallied hard, more than 2.5%, with silver leading and the dollar falling. After weeks of writing that this is a rate market, I will not turn around and dismiss the day the rate data finally broke gold's way. The bounce is real, and it deserves to be treated as real.
Now, here is what the celebration is missing. The inflation that just cooled is June's inflation, and June is gone. Gasoline fell about 10% that month, and it fell because the ceasefire had reopened the Strait of Hormuz and oil had drained lower.
That world no longer exists.
Over the weekend, the war reignited, the US and Iran traded strikes for a third time, and only yesterday, the administration announced a 20% toll on all cargo through the Strait and a reinstated blockade of Iranian ports, effective this afternoon. Crude is back near $80 and Brent near $87. So, the same report that has gold rallying describes a disinflation that the events of the past four days are already reversing. The market is buying gold on last month's inflation while this month's climbs on the screen beside it. That is the tension that defines today, and it is why I think this is more likely a large corrective bounce than a turn.
Besides, can you even see today’s rally on the long-term chart above? Not without zooming in on it through a telescope.
Today’s rally is even barely visible on the 4-hour candlestick chart.
The most interesting thing about today’s rally – from the purely technical point of view – is that even the short-term resistance line held. Gold touched it and gave away some of the gains.
That’s exactly how a market looks when it doesn’t want to rally. It does react to bullish news, but in a weak way and the rallies don’t last long. Declines, on the other hand, are magnified and they last.
Same with silver – the declining resistance line remains intact. Silver futures moved to precisely $60.00, and this level triggered the reversal.
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And this is the line that settles it. For all the drama in gold, the dollar is down today but still above 100, still above the breakout it made and held. That breakout has been the anchor of this entire decline, and it has not broken. A real change of regime, the kind that might turn gold's trend rather than interrupt it, needs the dollar to lose 100 (other factors would still be important, though). Until it does, I read today as a strong counter-move inside a downtrend, not the end of one.
Technically speaking… Let me quote what I wrote about the above chart just yesterday:
“Please note that USD’s rising support line is below the current price and it wasn’t touched. It wouldn’t be odd if we saw a move back to it before another bigger rally starts – similarly to what we saw in the first half of June.”
That’s exactly what we saw earlier today. The USD Index moved briefly below the previous 2026 highs, and the rising support line, and it quickly moved back above both levels. This tells us that the market has pretty much decided that the previous resistance is the new floor. And if so… where do we go from here?
Higher – in case of the USD Index.
Lower – in case of gold, silver, non-energy commodities, and mining stocks.
There is a second catalyst still ahead today. Warsh gives his first testimony to Congress this morning, shortly after the print. If he holds the hawkish line and points at the oil-driven inflation still to come, he might cap this rally by midday. If he sounds soft, gold runs further. So, the day is not settled, and I would not chase either direction into it (through daytrading).
For now, gold’s and USD’s reaction clearly confirm the scenario for which I’ve been preparing you for many days now.
As always, I will keep my subscribers informed.
Thank you for reading my today’s free analysis.
Sincerely,
Przemyslaw K. Radomski, CFA