Gold surged amid panic in the U.S. and Japanese bond markets. Market fears surrounding the proposed tax bill led to very weak demand in recent bond auctions, triggering a broader bond selloff. The U.S. 30-year yield rose above 5%, a level reached only once since 2007, except during the COVID shock. 

Earlier in the week, several developments also supported gold: 

• The Ukraine ceasefire plan collapsed 

• Reports emerged that Israel is planning an attack on Iranian nuclear sites 

• Jamie Dimon issued multiple warnings about stagflation risks 

• The RBA cut interest rates in a dovish policy meeting 

• Japan recorded its weakest 20-year bond auction since 1987 

In response to this wave of negative macroeconomic news, gold rallied from the lower boundary of its trend channel to the upper line, forming a short-term (yellow) rising channel within the broader move. 

Now, the Republican Party has agreed on an updated tax bill, which has calmed markets to some extent. However, yields remain elevated, and the market tone is still fragile. 

(AUDJPY) 

Gold began to pull back from the 3,350 resistance level today, but the upper boundary of the trend channel lies at 3,370 so another push toward that level is still possible. Unless market conditions shift meaningfully with more positive gold news, a reversal near the upper trend line has either already started or may begin soon. The 3,270 level remains the key support to watch for a potential move back toward the lower boundary of the channel. 

If a breakout above the trend channel occurs, the outlook for gold could shift quickly to the upside. While long positioning in gold remains elevated, “managed money” has already taken significant profits and reduced exposure. This is currently a negative for gold, but if the market environment changes and those participants begin re-entering long positions, it could provide a boost for another leg higher. 

Going forward, the bond market and U.S. trade negotiations will be the primary drivers for gold. Meanwhile, geopolitical risks in the Middle East and Eastern Europe remain potential black swan catalysts that could push gold sharply in either direction.