Today is the last session of the month, and I want to walk you through what I wrote over the past two weeks and what the market did with it.
Not to take a victory lap, but because the value of a forecast is only visible afterward, and because what comes next follows directly from it.
There will be times when the market doesn’t follow the technical rules for a while, and you might be tempted to think “this technical stuff is no longer working” – I’ve been receiving these kind of messages regularly in the past twenty years. The point here is to show you that all this DOES work. It’s probabilistic, not deterministic – in other words, it simply doesn’t work each and every time, but frequently to allow one to make money on it (unless they mess up position sizing that is – but this likely is not about you as you have the entire framework to determine those sizes).
Let’s start with the dollar, since it drove everything else.
On the twenty-seventh of July, I wrote this:
"That's the USD's tendency to reverse its course close to the turn of the month, and what tends to happen beforehand if the preceding move was a rally. I marked those cases with thick, dashed lines. We saw at least a few days of declines, not just a one-day move lower. This suggests that we need a day or few days at the current or lower price levels before the move is over."
The next day I put a date on it:
"The USD Index reversed today and is a bit down – it still seems likely that we'll see the – likely final – move lower before the end of the month, so that we can have a turnaround close to the turn of the month. This would be in tune with what tends to happen on most months."
The dollar declined on the twenty-eighth, again on the twenty-ninth, and then fell hard on the thirtieth, dipping below 100. A few days of declines at lower price levels, exactly as described. And today, on the final session of the month, it has turned and climbed back above 100.
The way it got there deserves a moment, because it makes the point stronger rather than weaker. Thursday's drop of roughly 2.4% was the largest single-day fall in the dollar since January of 2023, and it came on suspected coordinated intervention by Japanese and Korean authorities. That is two governments buying yen, not the market repricing American interest rates. Yesterday afternoon [Intraday Gold Trading Alert] I wrote that I did not think the breakdown beneath 100 would be confirmed. It was not. There was never a daily close beneath the level (in case of the cash index), and today the Bank of Japan left rates at 1% in an eight to one vote, the yen fell back, and the dollar recovered.
An intervention moves a currency for a session. It does not change an interest rate differential. The thirty-year Treasury yield sits near 5.24%, its highest in nineteen years, the market prices roughly a 63% chance of a Federal Reserve hike in September, and the Bank of England held this week on a hawkish six to three split. None of that softened while the dollar was being pushed around.
The fact that the USD Index just proved that it has strong support at 100 tells us that it’s now ready to soar. And it seems that metals and miners are ready to slide.
Let me deal with the one number the bullish side will use, because you will see it written somewhere this weekend. Gold is on track for its first monthly gain since February, somewhere near 1.7% for July, and central banks bought 289 tonnes in the second quarter. Both are true. Neither is what they will be presented as. After five consecutive monthly declines, a rise of well under two percent is a pause in a downtrend, not a reversal of one. Gold ends this month below where it traded on the twenty-second, below where it traded in June, and a very long way below where it started the year. Central bank buying is a slow, price-insensitive floor operating on a horizon of years. It has been running throughout the entire decline, and it did not stop a single month of it.
What matters more is what this month contained. Gold was handed a peace pause, then a war escalation, then the largest one-day collapse in oil of the entire conflict, then a Federal Reserve meeting that knocked rate-hike odds down, then the worst equity session of the year, then the biggest one-day drop in the dollar since 2023. Six shocks, in both directions, inside five weeks. All it managed was 1.7%, and it is giving a good part of that back today.
Back-and-forth movement with lower highs… Does it remind you of something?
Because it should.
This is EXACTLY what preceded the most volatile part of the post-2011-top slide in gold, silver, and mining stocks.
July 2026 appears very similar to March 2013.
If so… This is the final time to buckle up.
The dollar has turned where I said it would turn. Crude oil corrected just as I expected it to. My short positions are back on at full size, and my targets are unchanged. You’ve been informed and ready for a bigger corrective rally throughout this whole period. Precious metals turned out to be even weaker than I had thought, and this protection was ultimately not used – but I continue to think that having it was the right thing to do.
Getting back to gold - a market that needs a currency intervention to rally, and then cannot hold the gain past the next session, is not building a bottom. It is running out of buyers.
As always, I will keep my subscribers informed.
[The analysis continues and it includes my detailed and updated take on the near- and medium-term targets for gold, silver, and mining stocks. We currently have a very special offer for new subscribers and I encourage you to check it out.]
Thank you for reading my today’s free, Gold-Trading-Alert-based analysis.
Sincerely,
Przemyslaw K. Radomski, CFA