Finally, the stock market’s reversal is significant as a data point, but not as a trend change. As GAM Investments’ Paul Markham put it, the idea that this will be a sustained rally from here is “quite difficult to believe.”
USD Index Prepares For 100-Level Assault
What matters now is what happens in the next 48-72 hours. If Trump’s words translate into an actual ceasefire and the Strait of Hormuz reopens, oil drops to $65-70, the USD gives back its gains, and the precious metals picture shifts… Or it simply continues with its post-2011 analogy – which would be more likely. I’m monitoring the situation.
But if the Strait stays closed and the fighting continues, which is the most likely scenario given the new hardline Supreme Leader and Iran’s stated position, then oil will re-approach $100, the USD will resume its move higher, stocks will very likely decline and the precious metals decline will continue.
If de-escalation is real, the safe-haven bid that has been propping gold up disappears, and miners fall with gold. If the war continues, oil-driven cost pressures crush mining margins while USD strength pressures gold from above.
Thank you for reading today’s analysis – I appreciate that you took the time to dig deeper and that you read the entire piece. If you’d like to get more (and extra details not available to 99% investors), I invite you to stay updated with our free analyses – sign up for our free gold newsletter now.
Thank you.
Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®
