Gold settled at 4662 on Friday, posting its third-best week of the year, as a sharply weaker U.S. Dollar drove a broad rally across non-dollar assets ranging from the euro and the Swiss franc to Bitcoin, Mark Mead Baillie writes in his weekly commentary "The Gold Update" on GoldSeek.

By both percentage gain (+5.2%) and points added (+230), the week ranked third-best among the 33 full trading weeks year-to-date, Baillie notes. The advance extends a newly confirmed weekly "parabolic Long" trend in gold that was first flagged in last week's column, "Still Higher Gold Ahead," when the price stood at 4432.

Parabolic Long trend off to a fast start

In that earlier piece, Baillie charted the maximum percentage price increases and durations of the 10 prior such Long trends dating from August 2022, enabling the extrapolation: "Conservatively … from here at 4432 we'd reach Gold 4959 during this Long trend." The move, he calculated, would reasonably take some 15 weeks. Instead, gold has already covered 44% of the distance to 4959 in just the first week. "Conservatively" indeed, Baillie remarks.

Bessent's bond announcement

Although The Gold Update would "like to take a bow" for inspiring the rally, Baillie instead tips his hat to U.S. Treasury Secretary Scott "Buy Back Bonds!" Bessent, whose Wednesday announcement at 12:30 GMT that the Treasury would repurchase longer-term U.S. debt in exchange for shorter-duration securities sent gold soaring. Through the remainder of Wednesday's trading hours, gold leapt as much as +159 points (+3.6%) intra-day following the announcement. Baillie also observes that gold was already up as much as 61 points before Bessent spoke — adding, conspiratorially, that "one wonders which entities already had been buying."

Such operations are a recognized debt-management tool: the Treasury has run a regular buyback program since resuming it in 2024, swapping outstanding older, less-liquid long-dated securities for shorter-dated paper or cash in part to support market liquidity and shape the average maturity of the debt pile.

The rotation of the U.S. yield curve from negative just a few years back to positive prudently supports lowering the Treasury's potential payout, assuming the usual buyers are there, Baillie writes. The large caveat: a lower-yielding Dollar in turn loses appeal — and so gold gets the bid. The inverse relationship is longstanding: gold is priced in dollars worldwide, so a weaker greenback makes the metal less expensive in other currencies and has historically gone hand in hand with strength in the metal.

Bitcoin joins the contra-Dollar trade

Bitcoin also benefited in the buying binge, breaking back above Baillie's "fib support zone" as the rightmost weekly bar "Sayled" higher. Asked by his own column interlocutor whether he is "REALLY jumping on the Bitcoin bandwagon," Baillie answers that he remains strictly an ongoing observer. His point: non-dollar money pools across the liquidity spectrum benefited from the Dollar's bad luck in recording its fourth-worst weekly percentage loss of the year. Conversely, the euro posted its fifth-best week, the Swiss franc its second-best, and Bitcoin its best weekly net percentage gain (+22.6%) since the week ending 01 March 2024. It was likewise gold's third-best week of the year as the fresh parabolic Long trend kicked into a yet higher gear — big numbers for big gold on the weekly bars, he writes, but perhaps too big, too fast.

Price stretched above valuation

As pro-gold as he is, Baillie keeps his feet on the ground. The yellow metal zoomed higher this past week on the legitimate fundamental of Dollar weakness — albeit, as he has demonstrated over the years, gold plays no currency favourites even though Dollar debasement is the primary driver of his Fair Value model. His BEGOS Market Value for gold stands at 4167 in the opening Scoreboard. On his one-year chart of daily closes, in which the oscillative peaks in the lower panel are connected by red lines to the price peaks, the deviation of price above its smooth valuation line is again becoming extreme — indeed the most extreme since the six consecutive trading days from 22 January into the All-Time Intra-Day High of 5586 on 29 January. While not necessarily at a peak today, the stretch is notable, he writes.

Two factors that could stem the uptrend

Baillie points to two non-technical factors that could stem gold's recent robust uptrend. First, next week's array of 11 incoming metrics for his Economic Barometer includes the "Fed-favoured" Personal Consumption Expenditures (PCE) for July; consensus calls for increases of +0.1% headline and +0.2% core over those of a completely benign June, an uptrend that could then perhaps be construed as gold-negative. Second, a number of saber-rattling Federal Reserve officials of late have an eye toward raising the Fed Funds rate; Baillie will watch how Fed head Kevin "The Warrior" Warsh addresses any such notion at Jackson Hole this coming Friday — the Kansas City Fed's annual symposium in Wyoming, a setting where past Fed leaders have used keynote remarks to signal shifts in the policy outlook.

He adds that as the USA/Iran war seems on the path to "inevitibly" re-heat, a bid for oil would re-elicit a bid for the Dollar — which during warring days has been gold-negative — and that closing the gap between gold's price and its BEGOS Market Value would be catalytic.

Gold has only just embarked on its new weekly parabolic Long trend, but down weeks within overall uptrends come with the territory: the previous Long trend lasted 14 weeks, five of which were down — it happens. "We don't see the new Long trend being 'Short-lived'; but hardly do see it as simply uni-directionally up," Baillie writes.

Economic Barometer turns higher

Meanwhile, the Economic Barometer is trying to buck what had recently seemed a uni-directionally down run. Of the 12 metrics that fed the Barometer this past week, eight were better period-over-period. The notable standouts were July's Building Permits and the Conference Board's Leading (i.e. "lagging") Economic Index, the latter having reported a positive bias for only the fourth time in the past ten months. Building Permits beat consensus and June's figure, which was also revised upward — potentially positive for August's Housing Starts, which for July missed consensus, came in below June, and were revised lower. In turning to the Econ Baro graphic, Baillie cues "If I Had a Hammer" (The Weavers, 1950).

Gold and silver levels

On his two-panel gold graphic — three months of daily bars on the left and a 10-day Market Profile on the right — the "baby blue dots" signaled a buy upon crossing above the -80% axis at the 02 July close of 4136; price today is +12.7% higher. The Profile's notable volume-dominant support levels now stand at 4547 and 4450.

Silver has been a bit less robust on her recent upside run, having not reached May's higher levels as gold already has. Yet similar to gold, her "Baby Blues" buy came at the 30 June close of 59.05; she is now +16.9% higher at 69.01, with 64.95 standing as her most volume-dominant support on the Profile.

Q2 earnings season closes

Toward wrapping up, Baillie turns to the just-closed Q2 earnings season. Of the S&P 500's 503 constituents, 443 reported within the calendar season, and 349 (79%) bettered their bottom lines from Q2 a year ago — by percentage improvement, the second-best result across the past 12 reporting quarters. That is the good news.

The bad news, he argues, is that the overall level of earnings remains significantly insufficient to support an S&P yielding just 1.090% with a "live" trailing-twelve-month price/earnings ratio of 43.1x — itself +70% higher than the 25.4x of January 2013, and, in his framing, mathematically suggestive of a correction in the S&P of worse than -40%. He reprised the moment from "The Eiger Sanction" (Universal, 1975) in which Reiner Schöne, as Karl Freytag, exclaims to Michael Grimm (Anderl Meyer) and Clint Eastwood (Jonathan Hemlock) while all desperately cling to the iconic north face: "The ice is cracking!!"

But gold, Baillie counters, "is cracklin'!!"

About the author

Mark Mead Baillie began an extensive business career with two years in banking and financial services at Banque Nationale de Paris, followed by three years in corporate research at Barclays Bank and six years as an analyst and corporate lender with Société Générale. For the last 22 years he has run his own financial services company, de Meadville International, which comprehensively follows his BEGOS complex of markets (Bond/Euro/Gold/Oil/S&P) and the trading of the futures therein. His work is featured in Merrill Lynch Wealth Management client presentations, and he is the weekly author of "The Gold Update," known in the financial website community as "mmb" and "deMeadville." He holds a BS in Business from the University of Southern California and an MBA in Finance from Golden Gate University.

Source: The Gold Update | deMeadville | X: @deMeadvillePro. Originally published by GoldSeek. Copyright Ⓒ 2010 - 2026. All Rights Reserved.