The peace is a done deal, right?
- No, not yet.
- Even if – and this is critical – gold still failed to rally back above the previously broken support line. It still serves as resistance.
Gold's numbers today look like a turnaround. The chart says otherwise. The metal ran higher, silver and copper came along, and at one point, gold was up more than two percent on the day. Set the green figures aside and look at the price action, and the move did one thing. It carried gold back up to its recent high and stopped there.
It did not reclaim the broken support line. The line gold sliced through on the way down still sits overhead as resistance, and gold is still underneath it. The medium-term picture has not changed.
This is what makes today bearish rather than bullish, and the reason is worth stating precisely.
Gold did not bounce on a thin setup. It bounced on the strongest backdrop it has had in weeks.
Oil fell hard on deal optimism. The dollar slipped. Yields eased. Silver and copper, which had been leading the sector lower all week, turned higher and rallied alongside gold. That is close to a perfect setup for a breakout. The breakout did not come. When a market is handed everything it needs to clear resistance and still fails to do it, the message is about where it wants to go once the help fades.
And mining stocks?
They moved higher, and they reached their 50% Fibonacci retracement.
This seems bullish until you see that this is exactly what ended the correction in March.
There’s no technical game-changer here despite…
To the fundamentals, because they are louder than the chart today, and the gap between the two is the point. Oil dropped because the market is pricing a US-Iran deal that reopens the Strait of Hormuz. There is no deal. There is a draft. As I write this, Trump is reportedly in the White House Situation Room making what he called a "final determination" on whether to sign. Iran's Supreme Leader has not approved the document. The enriched-uranium question that has broken every prior round is pushed off to later talks.
Look at how the week unfolded. On Wednesday, the US struck Iran again, Trump dismissed a report that Iran and Oman would jointly manage Hormuz, and he said he was not satisfied with the agreement. By Thursday, there was a tentative memorandum. By Friday, he is deciding whether to sign it. New sanctions on Iranian oil went out this week while the talks ran. This is not a settled peace. It is a sequence that has reversed itself inside a day more than once, and the man at the center of it told the market one weekend that a deal was "largely negotiated," then, less than a day later, that it was "not even fully negotiated yet."
The other side deserves a fair hearing. If Trump signs, and oil keeps falling toward the level a real reopening would justify, the first link in the chain that has weighed on gold loosens, and gold earns a tailwind rather than a bounce. That is why the line matters. The day gold confirms the breakout back above the broken support line, I will treat the picture as changed, and I will say so here. Today is not that day.
Gold's numbers say it woke up. The chart says it walked back to the line it broke and stalled below it. Until it closes above that line, nothing has changed. A big move lower here seems much more likely than another move big move up.
As always, I’ll keep my subscribers updated.
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Thank you.
Sincerely,
Przemyslaw K. Radomski, CFA