Good morning. In 1933, the U.S. government made it illegal for citizens to own most forms of gold, forcing them to sell it to the Federal Reserve at $20.67 an ounce.
A year later, the government revalued gold at $35 an ounce, a 70% jump overnight. Talk about the original market manipulation.
-Shaun A, Jonathan Kibbler, Jordon Mellor
MARKETS
How’s your favorite today?
Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.
FOREX
Overbought, Overhyped, or Overdue for $3,700?
Gold has once again stolen the spotlight this week. After breaking cleanly through resistance and printing a new all-time high at $3,674, the market is catching its breath near $3,640 for now.
The move has been powered by a cocktail of Fed cut bets, political instability in Europe and Asia, and persistent geopolitical risks in the Middle East. But at these levels, traders are starting to weigh momentum against exhaustion.
Here’s what you need to know:
1. Fundamentals Keep the Floor Under Gold
Markets are still leaning into the idea that the Fed will cut rates this month, a narrative reinforced by weaker U.S. employment data. Add to that a political crisis in France and Japan, plus fresh conflict headlines out of the Middle East, and gold’s safe-haven demand remains strong. In short, the backdrop is tailor-made for buyers.
2. Technical Breakdown for Gold
Gold’s run has been impressive, but I can’t ignore how stretched it feels right now. Price is sitting far above the moving averages, leaving the 100- and 200-day averages in the dust. That kind of distance tells me momentum is still in control, but also that chasing here carries risk.
The RSI grinding near overbought reminds me of past breakouts where the trend stayed strong longer than expected. I’ve been burned before assuming overbought means reversal, more often, it just means the trend is hot.
For me, the technicals say we’re still in a bullish structure, but I need to respect the possibility of pullbacks into the $3,600–$3,620 zone before the next leg up.
3. Key Levels in Play
Price action is hovering near $3,642, with immediate support now layered at $3,638, $3,626, and deeper at $3,608. On the upside, the psychological $3,650 cap is within reach, followed by $3,674 (the all-time high) and then $3,690 to $3,700 if momentum continues. As long as the $3,600 zone holds, bulls have the advantage.
4. Short-Term Exhaustion Signs
On the 4H view, technical indicators have cooled slightly from extremes but are still firmly in overbought territory. Importantly, the pullback in momentum has been sharper than the pullback in price, suggesting consolidation rather than reversal. It’s a pause that refreshes, not a breakdown, at least for now.
5. U.S. Inflation Data Up Next
The next big catalyst is U.S. inflation. Producer Price Index (PPI) lands today, with Consumer Price Index (CPI) due tomorrow. After last week’s weak jobs revisions, traders will watch these prints closely to confirm the Fed’s path. A hotter read could give the dollar some relief and slow gold’s advance, while a soft print re-energizes the bulls.
My Takeaway
Gold has punched into uncharted territory, and while momentum is stretched, the underlying drivers remain supportive. For me, the $3,600–$3,620 zone is the real battleground, hold it, and bulls will keep pressing toward $3,700. Lose it, and we finally get the deeper correction traders have been waiting for. Until then, this market belongs to the buyers.
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TRADER INSIGHTS
Commitment of Traders: Extreme Positions, But What’s Next?
Every week I check the Commitment of Trader reports and see if there are any extremes in positioning by the commercials or non-commercials. Extremes can often lead to strong turning points, and right now the British Pound is highlighting something interesting.
The Data
The image above shows the commercial or hedgers positioning on the British Pound futures. As we can see the last four times the red line has reached their current positions, the British Pound has risen.
On the other hand, the one time that commercials reached a selling extreme, the price eventually turned and went south.
Does this suggest that the British Pound could get going again?
History says commercials being this bullish has been a reliable signal for pound strength. But this time feels trickier. Commercials are buying at extremes, and the broader macro picture (fiscal stress, political uncertainty, stagnant growth) makes it harder to get fully bullish.
Still, with data surprising to the upside and inflation refusing to roll over, there’s a case for at least a near-term GBP rebound if shorts get squeezed.
My Take
I’ve got mixed feelings here. On one hand, the data is supportive, and the CoT extremes argue for upside. On the other hand, the UK’s growth story looks fragile, and fiscal risks aren’t going away.
WATCH
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GAMES
Trading Brain Training
I’m gold’s cousin, but cheaper to buy,
Industrial demand keeps me high.
From mirrors to chips, I play my part,
A safe-haven too, with a shining heart.
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ANSWER
Answer: SILVER $XAGUSD ( 0.0% )