The precious metals market "wishes to thank" U.S. Treasury Secretary Scott Bessent for his intervention in the bond market, writes David Chapman in his weekly "Technical Scoop" commentary published by SilverSeek. The intervention has sparked a big rally in gold, silver, and the gold stocks. Rather than viewing the Treasury's move — which Chapman calls an "Operation Twist redux" — as a positive, the market has read it as a sign of weakness and stress. As a result, the U.S. dollar sold off, gold "exploded to the upside," and Bitcoin soared as well. The nickname harks back to Operation Twist, the 1961 Federal Reserve program — revived on a larger scale in 2011–2012 — that sold short-dated debt and bought longer-dated securities in an effort to push down long-term yields.

The background "is not forgiving," Chapman writes, and gold is "rightly" responding positively to the stress. Long-dated U.S. Treasury yields initially fell, but by the end of the week they were mostly back up to where they started. The intervention also raises inflation concerns. "None of this is good."

Weekly moves in the metals complex:

• Gold rose 5.6% to its best levels since May, breaking out above $4,500 and holding there — a move Chapman says confirms the recent low at $3,941. In a best-case scenario, targets could reach $6,200. "Gold bugs will be elated."
• Silver jumped 7.2% but remains below its breakout points at $71/$72. Chapman expects silver to break out; once successfully through $71/$72, targets could be up to $138.
• Platinum climbed 7.8%, while the near precious metals were also higher, with palladium gaining 2.5% and copper consolidating recent gains, off a small 0.4%.
• Gold stocks, which have already broken out, saw the Gold Bugs Index (HUI) jump 12.6% and the TSX Gold Index (TGD) rise 13.7% — two of the most widely followed gold-mining equity benchmarks.

The gold/silver ratio — a measure of how many ounces of silver it takes to buy one ounce of gold — moved down 1.5% to 66.59, in favour of silver. Gold equities have quickly gone from down on the year to up on the year, with the HUI now ahead 23.1% and the TGD up 23.5%. Chapman's targets are up to 1,080 for the HUI and 1,225 for the TGD — levels he describes as "not that far away," leaving room for potentially higher targets. "Either way, gold stocks appear poised to move higher."

Things are also stirring in the junior gold developers' market, where the names primarily trade on the TSX Venture Exchange (CDNX), Canada's junior equities market. Chapman expects them to start moving after Labour Day.

On the currency side, the US$ Index — which tracks the dollar against a basket of major currencies — has broken down below 99.50, with targets appearing to point down to 95. Chapman anticipates a steady decline rather than a crash, though he notes that the initial reaction to the Treasury's move was a swift decline. Gold is priced in dollars, and a softer dollar makes bullion less expensive for holders of other currencies.

He closes by thanking Bessent again "for pointing out what many of us already knew": there is a big problem in the $40 trillion U.S. Treasury market. That market is the world's largest bond market and a key global benchmark for borrowing costs.

Source: David Chapman, "Technical Scoop: Perking Oil, Gold Soar, Dollar Dive," SilverSeek (https://silverseek.com/article/technical-scoop-perking-oil-gold-soar-dollar-dive); charts via StockCharts (). Chapman is not a registered advisory service, and his commentary is provided for informational and educational purposes only; he advises readers to consult a licensed professional financial advisor.