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Back at it after a quick power nap, I weathered the storm on Gold as I saw that optimism could hold more weight this week with Gold approaching key HTF Discount demand zones and DXY approaching critical resistance coupled with Hormuz starting to open up and in person negotiations seeing more optimism/ diplomacy in the works. I was trying to assess if either optimism could hold weight for larger pullbacks going to near EOM period or if it was far too late regarding the damage of the energy crisis. Difficulty with this has come with Israel still violating the ceasefire which I predicted they would but would at least give week(s) before next violation.
BUT they are breaching the ceasefire in record time which can bring difficulty to diplomacy. Now the key will be 3 things for me to maintain short term DXY bears and Gold bullish bias.
1) IF Iran retaliates asap and shuts down Hormuz/ walks away from MOU and ceasefire OR If they give more "breathing" room and do not retaliate unless critical Beirut attacks
2) Pricing wise if DXY rejects 101.3s, Gold holds above 4100 followed by 4130 and 4150s and if Oil remains flat (any shift of this still shows tensions are high, energy crisis in focus and inflation concerns dominating with FOMC sentiment)
Otherwise I still think short term this upside intra move on DXY and intra downside moves on SPX and XAU are early week price set ups as I was expected the optimism plays Tuesday onward.
Looks like both Iran and US believe time is on their side. US believes that Iran oil storage has filled to capacity and cut back in oil production is now required, causing major economic loss to Iran. Some independent reports also saying increasing shortages of critical supplies including food in Iran. On the other hand Iran believes that global oil reserves have run down by more than a billion barrels and we are getting close to a stage where physical shortages of petroleum products will become serious first in Asia and then Europe. This will spike up oil prices sharply, which is the biggest pain point politically for @realDonaldTrump. So far Trump has successfully contained oil price hikes for several weeks by repeatedly talking about an imminent deal without any change of the situation on the ground. Hope my assessment is incorrect but based on what we have seen and heard, there does not seem to be any imminent deal. If the current status quo is maintained be ready to see much bigger economic shock to the economy.