As we discussed in my last note, while the rhetoric on U.S./China relations heated up over the past two weeks, it seems the Trump administration would be happy to kick the can down the road again, with another “pause” on tariff escalations.  That would buy time to execute the domestic agenda under some relative global stability.

The meetings over the weekend between high level trade reps suggest that indeed will be the outcome.  That expectation has been set going into Thursday’s meeting between Trump and Xi.

With that, stocks broke out to new record highs today.  And the bubbling risk signals of just 10 days ago have now seemingly quelled.

We’ve been watching a technical reversal signal in gold.  So far that has predicted a 9% fall in gold prices over just the past six days.

And today, we get a break of this big trendline …

Remember, we followed this parabolic move in gold over the past six weeks.  The timeline mapped closely to the EU’s plan to send €140 billion of frozen Russian assets to Ukraine.

And as we discussed, if a nation’s money can be confiscated, the trust that underpins all fiat currency (a government IOU) is weakened.

It safe to say China has been watching closely.  They hold roughly $730 billion of U.S. Treasuries — and gold is the safe haven outlet.

Not coincidentally, the top in gold at this point aligns with the reports out of the IMF and World Bank meetings ten days ago — that said the Trump administration would not support the EU’s plan to use (confiscate) Russian assets.  Trump reiterated that stance today in a press conference on Air Force One.

Again, that reduces the “confiscation/distrust premium” in gold.

Adding fuel to the gold correction, as we head into the Fed this week, inflation expectations have been on the move, lower.

What the Fed cares most about is losing control of inflation expectations.  Clearly, that’s not happening.

As you can see, at 2.19% it’s tracking toward 2%, it’s back to May levels, and it’s below the levels of last September, when the Fed started the easing cycle with a 50 basis point cut.