Gold and Bitcoin Surge as U.S. Bond Buybacks Surprise Markets

Gold and Bitcoin surged after the U.S. Treasury announced it would double the size of its long-term bond buybacks from $2 billion to at least $4 billion per operation. This was important because the move pushed bond prices higher and weakened the U.S. dollar. Gold jumped sharply, while Bitcoin broke out of its recent range and rose around 20%.

Major U.S. and Japanese stock indexes finished the week lower as investors became more cautious. High bond yields, U.S.-Iran tensions, and weakness in AI and semiconductor stocks hurt sentiment. Higher WTI crude oil prices were also negative for Japan, as more expensive energy can increase costs for Japanese businesses.

WTI crude oil rose as U.S.-Iran tensions increased, including the possibility of new U.S. economic sanctions on Iran. Meanwhile, the Fed’s July meeting minutes showed that officials expect inflation to slow, but another rate hike could be needed if inflation remains high.

Markets This Week

U.S. Stocks

The Dow started the week below the 10-day moving average, encouraging further selling throughout the week. Higher WTI crude oil prices and concerns about the U.S. bond market added to the weakness. The market is now in a short-term downtrend, so selling strength around the 10-day moving average could be the preferred strategy this week. Resistance levels are at 53,500, 54,000, 54,500, 55,000 and 56,000. Support is seen at 52,500, 51,500, 51,000 and 50,000.