Last week, we talked about signs of stress in markets. The VIX spiked on credit concerns in a few regional banks. And there was a spike in overnight funding rates (the same spot stress emerged in the late 2019 liquidity crunch).
At the same time, gold had just jumped 11% in nine days, to fresh record highs — which looked like safe haven demand.
The good news: the liquidity warning signs subsided today.
The VIX is now back below 20. The overnight lending market normalized.
What about gold?
Gold closed the week on Friday with a sharp reversal. After rising 64% on the year, and 27% in just the past six weeks, gold ended the week with this chart …
In the far right of the chart, that red bar is an outside day — a bearish technical reversal signal. Silver printed one too, a day earlier. And these signals came with some very relevant news.
Remember, as we've discussed here in my daily notes, the doubling in gold prices over the past 18 months has closely tracked a significant theme: the West’s seizure of Russian assets and the ongoing debate over confiscation.
On that note, it was reported out of the IMF and World Bank meetings last week that the Trump administration would not support the EU's plan to fund Ukraine with frozen Russian assets.
That sounds like a reason to reduce the "confiscation/distrust premium" in gold.
Hence, the bearish reversal.
But, gold had a strong bounce back today.
The bearish outside day still holds in Silver …
And in the most important stock in the world (Nvidia — the bearish outside day from October 10th) …