Momentum Shift: Gold Holds Strong Amid Mounting Dollar Pressure

Hello,

🪙 Gold Market Outlook – May 8, 2025

📈 Current Price Snapshot
Spot Gold (XAU/USD): $3,302/oz

Gold is holding firm above key support levels, signaling sustained bullish momentum. The $3,300 level has now been clearly breached and is acting as short-term support. If this level continues to hold, further upside continuation is expected, with a possible target of $3,500.

🧭 Technical Outlook

4H Major Support: $3,274.637

1D Floor Support: $3,265.328

1W Pivot Point (PP): $3,265.203

1M Pivot Point (PP): $3,248.445

"A test of the weekly/monthly pivot points is possible but uncertain, as current sentiment favors risk-on for gold, while the USD faces risk-off pressure."

A pullback to support is possible, but it’s unlikely under the current macro and technical context.

💬 Macro Fundamentals
Gold prices fell earlier today due to optimism surrounding a potential Trump–UK trade deal and easing geopolitical tensions. However, the market remains cautious as US-China officials are scheduled to meet in Switzerland. Meanwhile, China's central bank approved foreign exchange purchases by commercial banks, further boosting gold imports and supporting physical demand.

"Such measures are likely to keep supporting bullion demand."
— Han Tan, Exinity Group

🌍 Geopolitical Risk Factor
India-Pakistan tensions have escalated, with Pakistan downing 12 Indian drones, which is contributing to increased safe-haven demand in the region.

"Potentially leading to an unquantifiable level of safe-haven demand."
— Ole Hansen, Saxo Bank

Target: $3,500.

The Support and Resistance outlined in green and red are the respective support/resistance for this pair currently for 1M-1Y timeframes!

No Nonsense. Just Really Good Market Insights. Leave a Boost

TradeWithTheTrend3344

Note

If the 1W/1M pivot points don’t hold as support, we could see a drop toward the trendline. If the trendline also gives way, expect a potential test of the 1M support structure. Just sharing this as a heads-up. It’s Friday, so best to stay patient and let the market do its thing.

Note

🧭 U.S. Economic & Policy Outlook – Q2 2025
Theme: Navigating Structural Volatility with Robust Monetary and Market Design

🔹 1. Big Picture: Fragile Growth, Elevated Uncertainty, and Strategic Adaptation
The U.S. economy is experiencing slowing momentum, but systemic stress remains contained thanks to robust frameworks and policy adaptability. Major developments shaping the outlook:

Q1 GDP shrank by -0.3%, though a moderate Q2 rebound is expected.

Inflation is still above target, despite significant disinflation over 2023–2024.

Labor markets are softening, but not collapsing.

Uncertainty is exceptionally high, with financial markets, policymakers, and consumers all signaling caution.

🔔 Geopolitical Watch: Former President Donald Trump is scheduled to meet Chinese officials in Switzerland in an effort to de-escalate tariff tensions introduced in April.
This introduces a high-volatility event risk, with potential global implications for trade, yields, and safe-haven flows—particularly bullish pressure on gold (XAU/USD).

🧩 2. Policy Philosophy: Robustness as Insurance in an Uncertain World
John C. Williams – Reykjavík Economic Conference (May 9, 2025)

Williams emphasized that uncertainty isn’t an anomaly—it’s a permanent feature of monetary policymaking. His key arguments:

Blend of rules and discretion ensures flexibility without losing credibility.

Robust policy isn’t perfect but performs reliably across a range of models and conditions.

Three Pillars of Robustness:

Independence & Accountability: Central banks must be empowered and responsible.

Transparency: Clear communication anchors expectations.

Well-Anchored Inflation Expectations: Protects against spirals in uncertain times.

💡 Fault tolerance, borrowed from engineering, is central: avoid policy settings where small misjudgments lead to large failures.

📉 3. April Treasury Market Stress: A Case Study in Resilience
Roberto Perli – Short-Term Funding Markets Conference (May 9, 2025)

Perli detailed how the April 2 surprise tariff announcement disrupted markets—but robust infrastructure contained the fallout:

Long-term yields spiked ~30 bps and liquidity deteriorated, but no market dysfunction occurred.

Treasury repo markets (SOFR, TGCR) stayed stable, with no major funding strains.

The highly leveraged cash-futures basis trade held firm, unlike March 2020.

The Fed’s Standing Repo Facility (SRF) received strong positive feedback from early-settlement tests and will be regularized.

Challenges remain (e.g., balance sheet frictions), but ongoing Fed refinements will target greater flexibility and dealer access.

📊 4. Credit, Sentiment, and the Path Ahead
FOMC & Markets:
Policymakers cite rising uncertainty (21 mentions in March FOMC minutes).

Market-implied rate cuts are increasing amid growth concerns.

Consumer Health:
Sentiment surveys show financial anxiety rising, though inflation expectations remain anchored—a critical signal of Fed credibility holding.

Credit Conditions:
Delinquency rates are ticking higher, but not at systemic levels.

Treasury and corporate bond markets are functioning with some stress, not disorder.

Monetary Tools in Focus:
The Fed is pursuing Quantitative Tightening (QT) via passive asset runoff.

Open market operations and repo tools (like SRF) maintain liquidity and policy control.

🪙 5. Strategic Themes: Supply Shocks, Gold, and Safe Havens
April tariffs represent a supply shock—they raise prices while lowering capacity (stagflationary).

In such conditions, traditional policy tools lose precision.

Investors are rotating into defensive assets like gold (XAU/USD) amid:

Tariff risk.

Rising uncertainty.

Shaky growth outlook.

Persistent inflation.

📈 We remain pro-bullish on gold, which stands to benefit from:

Real rate suppression

Increased volatility

Demand for portfolio hedges

🧭 Final Outlook: Resilience Now, But No Room for Complacency
Despite weaker growth and financial stress in Q1–Q2 2025, the U.S. has avoided recession, maintained market functioning, and preserved monetary policy credibility.

But risks are rising:

Geopolitical tension from U.S.–China tariff disputes.

Fragile consumer sentiment.

Elevated rate volatility.

Robust policy frameworks, clear communication, and safe-haven flows (especially into gold) will be essential stabilizers.

Note

🌍 Global Market Weekly Recap
May 5 – 9, 2025

Markets flipped between fear and optimism this week as fresh trade negotiations, policy signals, and geopolitical risks kept traders on edge. What began with tariff-driven turbulence turned into a relief rally by Thursday — though risk appetite remained fragile heading into the weekend.

🧠 Key Drivers This Week
🟢 Risk-On Momentum
Trade Hope Rises: Washington launched talks with 17 nations; Trump hinted deals were "weeks away." Markets responded with optimism.

UK-US Pact: A major trade agreement with the UK sparked bullish sentiment midweek.

Global Services Bounce: ISM Services PMI beat at 51.6, joined by stable prints from Japan (52.4) and the Eurozone (50.1).

Pro-Market Signals: Trump moved to ease AI chip restrictions; a win for big tech bulls.

Crypto Tailwinds: Arizona announced a Bitcoin Reserve Fund, boosting digital assets.

🔴 Risk-Off Tensions
Tariff Shock: Early week fear spiked after a 100% tariff on foreign films triggered broader trade anxiety.

Middle East Flashpoints: Escalations involving Israel and India added geopolitical risk.

Mixed Fed Tone: The FOMC warned of sticky inflation and employment softness — adding to policy uncertainty.

Record Trade Gap: The US March trade deficit ballooned to -$140.5B, denting dollar confidence midweek.

OPEC+ Output Rise: Oil was pressured early on as producers added barrels, before rebounding.

📊 Market Highlights by Asset
💵 US Dollar Index (DXY) & Yields
Volatile Ride: The dollar surged early on tariffs and strong data, dipped after the trade deficit shock, then bounced back post-UK trade deal.

Yields Moved in Tandem: 10-year Treasury yields followed the dollar’s lead, briefly dropping midweek before firming up Friday.

Net Result: Slightly higher weekly close, reflecting cautious optimism.

📈 S&P 500 (ES Futures)
Sideways Movement: Snapped its multi-week win streak but held within a tight range.

Big Thursday Pop: UK trade deal and easing AI restrictions boosted sentiment, especially in airlines and tech.

Macro Crosscurrents: Growth optimism competed with inflation and policy worries.

🪙 Gold (XAU/USD)
💥 Spiked to a weekly high of $3,347.56 before pulling back

Early Flight to Safety: Rallied sharply on tariff fears and Middle East tensions.

Midweek Strength: Bid higher on rising uncertainty and central bank easing.

Brief Reversal: Powell’s “resilient economy” comments caused a dip as traders recalibrated rate cut odds.

Resilient Finish: Held firm into Friday, underpinned by global uncertainty and central bank gold demand.

🔔 Takeaway:
Though it didn’t close at the weekly high, gold’s surge to $3,347.56 reflects strong underlying demand. With trade talks in flux and geopolitical risks unresolved, the bullish trend remains well-supported.

🛢 Crude Oil (WTI)
📈 Climbed 3.93% to settle above $60/barrel

Slump to Surge: Dropped early on rising OPEC+ output, but rebounded strongly as tensions flared and demand outlook improved.

Inventories & Sentiment: US stockpiles fell, reinforcing the demand recovery narrative.

Policy Fuel: Trade deal optimism and China’s easing helped lift prices late week.

₿ Bitcoin (BTC/USD)
🚀 Closed above $103,000, up 6.16% on the week

Regulatory Tailwind: Arizona’s move to establish a Bitcoin Reserve Fund drew headlines and investor interest.

Correlation Watch: Tracked risk-on flows but showed resilience even during pullbacks.

🌐 Macro Pulse
Fed on Hold: No policy changes; concern over inflation and jobs kept cuts off the table — for now.

China Eases Again: RRR cut, lower 7-day repo, and a sixth consecutive gold reserve increase.

European Improvement: Sentix Investor Confidence rose to -8.1 from -19.3.

Canada & Australia Softness: Weak PMIs and permits signaled regional growth drag.

🔚 Final Word
Markets are caught in a tug-of-war between rebounding global trade flows and lingering macro threats. Traders rotated between risk assets and safe havens, depending on which headlines dominated.

✨ Gold’s jump to $3,347.56 — even without a weekly close at that level — is a reminder that when volatility and uncertainty spike, gold still commands the spotlight.

Next week hinges on outcomes from the US-China summit and any concrete signs of trade de-escalation. Until then, expect choppy waters — and a watchful eye on gold.

Note

📅 U.S. April CPI Report Preview
🗓️ Release Date: Tuesday, May 13, 2025
🕰️ Time: 12:30 PM GMT
🌐 (Use a time zone converter to localize)

🔍 Why It Matters:
This is the first inflation reading since Trump’s February tariff implementation. Initial tariffs rose to 145% but have recently been reduced to 30%, calming fears of immediate consumer price spikes.

Fed Chair Powell remains in “wait and see” mode, so CPI results could be pivotal in shaping rate cut expectations this summer.

🔢 Market Forecasts (as of May 12 @ 2:13 AM GMT)

Indicator Forecast Previous
Headline CPI m/m +0.3% -0.1%
Core CPI m/m +0.2% +0.1%
Headline CPI y/y +2.5% +2.4%

📈 Inflation Signals to Watch

✅ Upside Risk (CPI surprise higher → USD bullish)

🏦 FOMC flagged elevated inflation risks in May

📊 ISM Services Prices (April): Rose to 65.1

🏭 S&P Global PMIs (April):
• Manufacturing firms reported sharp cost increases
• Services firms raised prices at the fastest pace since Jan

🌟 Dallas Fed Manufacturing: Prices Index jumped to 48.4 (highest since mid-2022)

🛍️ Dallas Fed Services: Selling Prices Index rose 8.4 points

🔹 If inflation beats, expect modest USD strength, especially vs EUR, JPY, AUD
🔹 Fed likely stays cautious → limited impact on immediate rate path

❌ Downside Risk (CPI miss → USD bearish)

💵 Avg. Hourly Earnings (April): Slowed to +0.2% m/m

😐 Consumer Confidence (April): Lower income expectations

🏗️ Richmond Fed Manufacturing:
• Prices Received: 3.68 → 3.03
• Prices Paid: 5.18 → 4.89

🔻 A weak print (e.g. +0.1%) could trigger broad USD selling, led by USD/JPY & USD/CHF
🔻 Rate cut bets would likely move forward

🌐 Macro Backdrop & Market Mood

🇺🇸➡️🇨🇳 Tariffs lowered to 30% after weekend U.S.-China talks in Switzerland

⚠️ Market still reacts more to trade headlines than data

🕊️ Fed remains patient, even with signs of higher inflation

📉 USD Reaction Map

Scenario CPI Print Likely USD Reaction
🔺 Strong CPI +0.3% headline, +0.2% core USD strength, especially vs JPY, EUR
⚖️ Neutral CPI Matches forecast Range-bound; reaction depends on risk tone
🔻 Weak CPI +0.1% headline/core Broad USD selloff; rate cut odds spike

🎯 Pro Trading Tips

📊 Headline CPI = short-term reaction, Core CPI = sustained trend

🧘‍♂️ Wait 15–30 minutes post-release before entering to avoid volatility traps

📰 Watch for Fed commentary & trade headlines that could override CPI moves

Note

🔍 Headline:
Inflation Expectations Mixed; Financial Outlook for Households Weakens

📊 Inflation Expectations

1-Year Ahead: Unchanged at 3.6%

3-Year Ahead: Increased by 0.2 percentage points to 3.2% (highest since July 2022)

5-Year Ahead: Decreased by 0.2 percentage points to 2.7%

Additional Notes:

Inflation uncertainty increased across all horizons

Disagreement (spread between optimistic and pessimistic views) rose for 1- and 3-year expectations, but dipped slightly for 5-year outlook

🏠 Home & Commodity Prices

Home price growth expectation: Increased by 0.3 percentage points to 3.3%
(Stable between 3.0% and 3.3% since Aug 2023)

Expected Year-Ahead Changes:

Gasoline: +0.3% → 3.5%

Medical Care: +0.8% → 8.7%

College Tuition: +2.4% → 9.1%

Rent: +1.8% → 9.0%

Food: -0.1% → 5.1%

💼 Labor Market Outlook

Expected earnings growth (1Y): Down 0.3% → 2.5% (lowest since Dec 2023)

Unemployment probability (1Y): Up 0.1% → 44.1% (highest since April 2020)

Job loss risk (1Y): Down 0.4% → 15.3%

Voluntary job change likelihood (1Y): Up 0.2% → 18.2% (led by under-40s and lower-income groups)

Chance of finding a job within 3 months if laid off: Down 1.9% → 49.2% (lowest since March 2021)

💵 Household Finances

Expected income growth (1Y): Down 0.2% → 2.6% (lowest since April 2021)

Expected household spending growth (1Y): Up 0.3% → 5.2%

Probability of missing a debt payment (next 3 months): Up 0.3% → 13.9%

Expected change in taxes (1Y): Up 0.1% → 3.3% (still below 12-month average of 3.7%)

Expected growth in government debt (1Y): Up 0.2% → 4.8% (still near record low)

Probability savings rates will rise in 12 months: Up 0.4% → 26.5%

Sentiment:

Current financial situation: More households report being worse off

Outlook for future financial situation (1Y): Sharp deterioration reported

📈 Market Expectations

Probability stock prices will be higher in 12 months: Up 1.9% → 35.7%

📝 About the Survey

Conducted by: Federal Reserve Bank of New York, Center for Microeconomic Data

Sample: ~1,300 U.S. households

Period: April 1–30, 2025

Method: Internet-based rotating panel (respondents participate up to 12 months)

Key Benefit: Tracks changes in individual expectations over time

Trade active

Note

🚨 1M Pivot Point Rejection at 3248.45
• Ongoing rejection at this level could suggest increased downside risk toward the 3000 area.

📉 1M Support Range: 3238.642 – 2989.624

📈 Bullish Confirmation:
• A break and close above 3248.45 (1M PP) would signal potential upside continuation.

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