Dollar weakness fails to gold while equities rise

The S&P 500 advanced 0.73% to close at 6,345.06, driven primarily by Apple's 5% surge following confirmation of a $100 billion domestic manufacturing investment commitment. This brings Apple's total U.S. investment pledge to $600 billion over four years. The Nasdaq outperformed with a 1.21% gain to 21,169.42, while the Dow lagged, adding just 81 points (0.18%) to close at 44,193.12.

We note that eight S&P 500 stocks hit all-time highs while thirteen touched 52-week lows—a breadth divergence that concerns us. The weakness in McCormick, Elevance Health, and Accenture suggests rotation out of defensive names may be premature.

The Dollar Index declined 0.50% to 98.29 in today's trading, continuing its recent weakness despite no change in Fed policy expectations. This move appears technically driven rather than fundamentally justified, presenting a potential opportunity for dollar longs if support holds at the 98 level.

Gold edged lower by 0.24% to $3,372.89 per ounce, a modest pullback we view as healthy consolidation after recent gains. Trading remained within a tight $3,349.70 to $3,382.50 range. More notably, silver outperformed with a $0.14 gain to $37.56, suggesting risk appetite isn't completely absent from precious metals markets.

Gold pulled back 0.24% to $3,372.89 in today's session, a modest decline that we view as profit-taking rather than trend reversal. The metal traded within a narrow $33 range ($3,349.70-$3,382.50), suggesting consolidation at elevated levels rather than distribution.

The most notable dynamic today was gold's inability to capitalize on dollar weakness. With the DXY down 0.50% to 98.29, we'd typically expect gold to push toward $3,400. This divergence suggests two possibilities: either gold is overbought short-term, or traders are positioning for a dollar bounce. We lean toward the former given gold's 41% twelve-month gain.

Today's price action created a potential bull flag on the hourly chart. The $3,350 level acted as solid intraday support level we're watching closely. A break below would target $3,300, while holding above keeps $3,400 in play for tomorrow's session.

Volume was 15% below the 20-day average, indicating lack of conviction in today's selling. The relative strength index (RSI) pulled back from 68 to 64, easing overbought conditions without breaking the uptrend.

Silver's outperformance today (+$0.14 to $37.56) is constructive for precious metals broadly. When silver leads gold, it typically signals risk-on sentiment within the metals complex. The gold/silver ratio tightening from 90 to 89.8 supports continuation of the metals rally.

Equity strength (S&P +0.73%) didn't significantly pressure gold, suggesting its safe-haven bid remains intact despite risk-on equity flows. This decorrelation is bullish medium-term.

Trading Levels for Tomorrow

Support levels:

• First support: $3,350 (today's low)
• Major support: $3,300 (psychological + 50-hour MA)
• Stop loss zone: $3,285

Resistance levels:

• First resistance: $3,382 (today's high)
• Target 1: $3,400 (psychological)
• Target 2: $3,425 (measured move from flag)

Today's consolidation appears healthy after the recent rally, and the lack of aggressive selling despite profit-taking opportunities suggests strong hands are accumulating.

For aggressive traders, consider silver over gold near-term given today's relative strength. For conservative positioning, wait for a clear break above $3,382 before adding to longs.

Watch tonight's Asian session closely Chinese buying has driven recent overnight gains. Any absence of Asian bid could signal near-term exhaustion. Additionally, tomorrow's U.S. economic data could introduce volatility. Keep position sizes moderate until we clear the $3,400 resistance convincingly.

The combination of weak breadth, defensive asset resilience, and unconvincing corporate reactions to earnings suggests this rally lacks conviction. . The dollar's weakness appears to be overdone near-term—watch for a bounce from current levels.

Wishing you as always good trading,