The gold market initially fell during the week but found enough support at the $4,600 level to turn things around and jump above the $4,800 level. The interest rate situation in the United States continues to cool off and that of course is a major influence on what happens with gold as rates rise gold drops and vice versa.
With the announcement that the Iranians were willing to let ships pass through the Strait of Hormuz without any interference during the ceasefire, we saw another jump. Ultimately, I think this is a scenario where short-term pullbacks continue to get bought into and I do think that we will go looking to the $5,000 level unless of course something ghastly happens in the meantime.
The US dollar fell again against the Swiss franc to hang around the 0.78 level at the end of the week. This is a pair that I think is going to remain very interesting because the interest rate differential favors the US dollar and of course the Swiss National Bank is more than willing to jump in and intervene if the Swiss franc gets to be too strong.
I would look for a buy on the dip type of opportunity this coming week and that’s especially true if the 0.78 level does in fact end up holding as support. To the upside the 0.80 level is a target, to the downside the 0.7650 level is a potential support level.
The Australian dollar had a big week but it must be said that the Friday candlestick looks like it’s giving back some of the gains, so we’ll have to watch that very closely. Interest rate differential is one of the things helping the Australian dollar against a multitude of currencies but also the same idea can be said about the commodities that back the Aussie dollar including gold.
The US dollar is currently on the backfoot as interest rates are dropping due to good news coming out of the Middle Eastern conflict. I do think that is going to continue to be a theme here so a pullback in the Australian dollar barring some type of major problem in the Middle East flaring back up should be an opportunity to get long.
The British pound has rallied rather significantly during the week to pierce the 1.3550 level but it has not been able to jump above it and stay above it. This is a pair that I’ll be watching very closely.
I do think the market is likely to be a situation where we are continuing to see a lot of noise. The market breaking to the upside on continued good news might be where things go in the short term.
The German index has had a strong trading week as we threatened the 25,000-euro region. This is a large round psychologically significant figure that a lot of people will be watching, and I think probably aiming for. After all it’s an obvious level that had previously been a barrier.
If we can break above the 25,000 level, then it opens up the possibility of a move towards the 25,400 level. Short-term pullbacks I think are buying opportunities that people will take advantage of as long as the news remains decent. Keep in mind the energy situation in Germany is crucial so if we start to see oil flow disrupted again that could be devastating.
The Bitcoin market is one I’ve been watching for a while and it’s nice to see that we finally broke out to the upside. I think with interest rates dropping in America you will start to see assets such as Bitcoin attract attention and it now looks like we are trying to turn things around perhaps heading towards the $80,000 level followed by the $84,000 level.
Short-term pullbacks could be buying opportunities. I have no interest in shorting Bitcoin; it behaved far too well during the Middle Eastern conflict.
Silver has taken off to break above the $80 level as interest rates dropped in America. Because of the inverse correlation between interest rates and silver this is not a huge surprise to me.
Keep an eye on the 10-year yield in America. If it jumps back above the 4.30 level it could put downward pressure on silver but in the meantime, I think short-term buying opportunities continue to be a potential way to look at this market. It is going to be noisy but that’s nothing new for silver. Make sure to keep your position size reasonable.
The euro rallied enough to break above the 1.18 level but suspiciously gave back some of those gains at the end of the day on Friday. I’ll be watching this pair; we could be selling off from here if there’s general euro weakness.
If we can break above the weekly candlestick then the euro could go looking to the 1.20 level. Ultimately if we do pull back from here, we may just stay in the same range we were in for a huge part of last year. That would be okay, it sets up a nice trading range from which people can place their positions. To the downside I see the 1.17 and the 1.16 level both as offering potential support.
