Markets rallied after president Trump announced the cancellation of planned military strikes against Iran, stating that discussions have reached the highest levels of leadership and a deal is close to being signed. Markets are difficult to trade when Trump intervenes, he can change the direction of the market depending on what he says.
However the news is in line with the wave count, I expected a bounce. Despite the bullish geopolitical news, macroeconomic hurdles remain underneath the surface. Thursday’s Producer Price Index (PPI) data actually came in hotter than economists expected (headline PPI climbed 1.1% in May), meaning wholesale inflation is still running hot.
That is why gold is going down, interest rates are going up but stock investors are not paying attention. Gold is approaching a bottom below its 200-day moving average. As inflation becomes stronger gold will rally because real rates will fall.