Gold: not so slowly at all.
The first part of today’s analysis will be quite similar to what you read yesterday, simply because the markets are moving pretty much exactly as I had outlined and as the Peak Chaos theory currently suggests.
Before I start, I’d like to say how grateful I am that Donald Trump wrote his Art of the Deal book and that I managed to discover and analyze it (and that I’m able to share those findings with you). Without it, all his actions didn’t seem coordinated, and it was difficult to forecast what his next move will be – which made the market analysis also much more difficult.
However, since I connected the dots, the political part of the analysis stopped being a hindrance and started to be an edge over those that didn’t realize that Trump is playing the game according to his own playbook. Maximum pressure, maximum chaos, and then moving to wins while keeping some of the pressure intact – but lowering it gradually.
The markets reacted very emotionally to it at first, but now they not only got used to it, but they appear to be reversing their reactions. While gold moved higher and USD lower based on most events, it’s now the opposite. Sure, the USD Index’s breakout had to be verified, and we saw a pause recently, but this is very much in tune with what we saw right before the previous tariff “deadline”. And the markets are reacting in the same way.
Thanks to this, we know what’s next, and the markets are already starting to respond to this. Most people will be very surprised when the USD Index revives seemingly “randomly” – there will be nothing random about that upcoming rally.
Quoting my previous comments:
First of all, there was no invalidation of the breakout above the declining resistance line – even if we consider the upper of them. This is key – this means that the outlook remains bullish and this week’s decline in the USDX is just a post-breakout pause – preparation before the rally picks up.
Second, my previous comments on the timing of the bottom relative to the pre-tariff-decline tendency remain fully up-to-date:
Tariff Deadline Extension Analysis
“The previous tariff deadline situation centered around June 1st, 2025, when Trump initially threatened to impose 50% tariffs on European Union imports. However, on May 25th, 2025 - just 6 days before the deadline - Trump agreed to postpone this deadline to July 9th following a phone call with EU Commission President Ursula von der Leyen. This represented a clear pattern of last-minute flexibility that markets began to anticipate.
The July deadlines presented a more complex scenario, with July 8th marking the expiration of a 90-day pause on "reciprocal tariffs" and July 9th being the extended EU deadline. Importantly, Trump signaled his flexibility much earlier this time. On June 27th, 2025 - about 11-12 days before the deadlines - he stated "No, we can do whatever we want" when asked if the July deadlines were set in stone, indicating they could be extended or shortened. This earlier communication of flexibility represents a key difference from the June pattern.
What makes this particularly relevant for USD Index analysis is that the dollar bottomed on July 1st, 2025 - precisely 7-8 days before the July deadlines. This timing wasn't coincidental. The market had learned from the June experience that Trump tends to provide flexibility around tariff deadlines, and the July 1st USD bottom occurred right after his June 27th comments about deadline flexibility. Markets essentially front-ran the expected postponement.
Looking at the current August 1st deadline, we can draw several important lessons. If the historical pattern holds, we might expect some form of communication about deadline flexibility approximately 6-12 days before August 1st - which would place it around July 20th-26th, 2025. Given that it’s [July 23], we're likely in the middle of this expected communication window.
However, there's a crucial difference this time. The USD Index has already demonstrated significant strength since its July 1st bottom, breaking above key resistance levels and showing what appears to be a confirmed uptrend reversal. Unlike the previous situations where tariff uncertainty created dollar weakness, the market now seems to be pricing in that tariffs are fundamentally bullish for the USD. This suggests that even if August deadlines are postponed, the USD Index may not revisit the July 1st lows, as the fundamental narrative has shifted from "tariff chaos equals dollar weakness" to "tariff implementation equals dollar strength."
The pattern suggests that while we might see some near-term USD volatility around potential August deadline communications, any weakness would likely be limited and short-lived compared to the previous cycles, as markets have now embraced the longer-term bullish implications of the tariff policy for dollar strength. That’s exactly what the confirmed breakout indicates on the technical front.
Let me write this again – tariff implementation equals dollar strength – and we already see it in the markets.”
Yesterday, we got information about the 15% trade deal with Japan and there’s a good chance that the EU will also face 15% tariffs. This is EXACTLY what the Peak Chaos theory implies at this stage – all this confirms it further. This is where Trump needs some wins to demonstrate that his approach is working. This is also where fundamental and emotional forces are starting to work in tune for higher USD Index values.
Timing-wise, we are in the analogy to the July 1 bottom right now, and here is the key thing that I want to stress today:
The USD Index didn’t soar right on July 1, even though that was the bottom. It didn’t rally on the next day, either. The rally was gradual. If this is the historical template, it’s also the most likely outcome here. Consequently, the current consolidation is in perfect tune with the pattern – it doesn’t invalidate it.
It continues to support higher USD values in the following days and weeks.
And you know what this means for mining stocks – declines. Most likely big declines, just as the rally in the USD is likely to be big, as the latter is starting it from very oversold levels.
The emphasis goes on the gradual nature of the rally. At the moment of writing these words, the USDX is up by 0.24, and gold is down by about 0.9%. Not only is the USD Index moving up exactly as it happened in early July after the previous pre-tariff-deadline bottom, but gold is once again magnifying the USD’s indication.
This is huge.
The breakdown below the rising support line based on this year’s local lows was verified thanks to the recent run-up and the subsequent decline. This verification makes the outlook more bearish than it was before we saw gold at the same price levels.
The current situation in gold is a disaster waiting to happen. Fundamentally, gold and (especially!) silver remain strong. But technically, this is a technical proof that this upleg is over.
Gold even just broke below its rising short-term support line, indicating that this post-breakdown pause is over.
Remember how I wrote that the invalidation of the move above the 78.6% Fibonacci retracement level will serve as the final bearish confirmation?
Gold didn’t look back after declining below it – it keeps on declining, and the link to 2013 remains intact.
This time, however, the situation in the USD is quite different, and a move higher in the USD Index would support a more decisive decline in the price of the yellow metal – not the back-and-forth type of decline that we saw in 2012 and early 2013.
Trees, Forests, and Mirrors
Finally, before summarizing, I’d like to write a few words about putting all those market movements into perspective. If you’re stressed about the market movement right now – or in general – this might be of great value to you. And if not, then maybe at least you’ll find those concepts interesting.
Perhaps you’ll find analogies to other things in your lives, and it might be useful in that regard as well.
Remember the saying about not missing the forest while looking at the tree? It’s often used when discussing markets, and it said to emphasize how important the context is as no market moves in isolation. And that’s true, but that’s not the only way in which it can be understood. There’s something much more important that it can teach us.
A tree is not necessarily just one market or just one trade. We can take this analogy a few levels higher, and treat the entire portfolio or financial wealth as one tree.
Yes.
It’s an important tree – something needed for survival, for covering multiple expenses, for making sure that we’re secured and that our family is fed and protected. And those are all important goals, but… Let’s not forget about the forest.
Our health, our relationships, our contribution to the world…
But most importantly: who we see in the mirror.
If someone acquires wealth by stealing or through unethical means, what will they see in the mirror? A decorated thief. A well-groomed liar.
It’s not important that others won’t know – the one looking in the mirror will know and that’s what matters the most. One’s own reputation with themselves.
You see, some things depend on us and some don’t.
We can do all the right things while analyzing the markets and still lose money. We can commit to a relationship and still be cheated on. We can provide service to someone with greatest care, and they can refuse to pay for it.
All those things are terrible, but… They don’t change who we are. They don’t impact our character. They don’t damage, who we see in the mirror.
Conversely, all those difficulties present opportunities for us to exercise virtue. To be kind. To be faithful. To keep your word, even if it might be difficult at times. To be a good person.
And this, my friends, is what really matters. If you look in the mirror and you love the person that’s there… Does it really matter that much if the market moves this way or that way on any given day? Yes, it is important, and yet… It’s a tree – not the forest.
Why am I writing all this? Because while it looks like the markets will move our way shortly, I want you to keep in mind you don’t have to wait for this trade to be successful. By being a good person – regardless of what’s outside of your control – you’ve already won.
Thank you for reading today’s free analysis. If you enjoyed it and would like to get premium details, I invite you to subscribe to my Gold Trading Alerts.
Thank you.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief