GDP missed at 1.5% against the 1.8% estimate, but the soft spot was government spending and inventories. Personal consumption held at 2.1%. Final sales to private domestic purchasers came in at 3.9%. The private economy is not falling apart, and Treasury yields moved higher after the data because the bond market read it the same way. Gold is climbing into rising yields because the dollar is doing more work than yields are doing damage. That does not last forever.
Crude Keeps the Ceiling on Gold’s Rally
U.S. strikes hit IRGC targets inside Iran overnight. Iranian missiles hit U.S. forces the day before. Hormuz is still barely functioning. Crude is elevated and every dollar it holds above $85 makes the next inflation report harder for gold bulls to count on.
Gold is rallying because the worst-case Fed outcome came off the table Wednesday night. The Middle East is the reason that rally has a ceiling. Warsh does not have to hike in September to stop this move. He just needs crude to keep the inflation data firm enough that the market cannot look at three dissents and shrug them off.
What to Watch
The dollar broke lower and September hike odds dropped 15 to 20 points from where they sat before the Fed meeting. That repricing opened the door for gold and the metal walked through it. The question now is how long the dollar keeps falling. The PCE number did not rebuild the hawkish case, but crude is still running and the next inflation readings will carry more of the energy cost that June’s report missed. If September expectations start climbing again on that data, the dollar finds a floor and gold loses the one thing supporting it.
The chart shows a month of base-building that has pushed gold above the lower retracement zone at $4072.40 to $4041.65. The resistance cluster overhead at $4162.36 to $4214.34 with the 50-day moving average sitting inside it is where this rally finds out whether it has real buying behind it or fades the way the previous attempts did. The accumulation pattern gives buyers a foundation, but passive dip-buying is not enough to crack through that resistance. The move needs aggressive offers getting taken out, and so far that has not happened.
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