Signs of an imminent US strike on Iran built until Trump yesterday strongly hinted he would hold off on ordering a strike, as "he's been told" the violence is coming to an end.
- The major news item remains speculation over an impending US strike on Iran. Iran is now in its sixth day of a near-total internet blackout. There has clearly been major violence akin to a revolutionary situation, but it is far from clear how many casualties there have been. The Iranian government claims about 3,000 dead (including security forces) while some opposition groups have suggested a death toll as high as 20,000. Foreign intelligence agencies tend to put the death toll at 10,000 or higher. It seems likely that US allies in the region have told President Trump to go slow and wait until the regime becomes weaker before striking, although this could be a deception operation like the USA and Israel implemented last Spring in the lead-up to Israel's surprise attack on the Iranian regime, missile force, and nuclear weapons program. Polymarket currently suggests a 50% chance of a US strike by the end of January and a 63% chance by the end of March. I personally think a strike early this Saturday morning is likely and Polymarket will give you odds greater than 10 to 1 on that bet.
- The effect of Trump's statement last night was to lower the anticipation of an imminent strike, and this sent WTI Crude Oil falling strongly yesterday, while Silver absolutely plummeted, and other precious metals declined. However, there has been some recovery in prices.
- The release yesterday of US PPI data was dovish for rate hikes as it showed no monthly increase while an increase of 0.2% was expected. Retail sales grew faster than expected. However two US rate cuts of 0.25% each are still expected over the course of 2026.
- Markets continue to be dominated by precious metals, although its only the two major precious metals that are really doing anything interesting.
- Gold - peaked at $4,642 (a record high) and is now trading within a normal bearish retracement. I am long of Gold and most trend traders will be also.
- Silver - peaked above $93.50 (a record high) then fell to $87 before recovering to trade above $90 on high volatility. I am long of Silver, and most trend traders will be also. This is really the standout precious metal.
- The Forex market is relatively quiet since the Japanese Yen regained some ground. The USD/JPY currency pair earlier traded well above the ¥159 handle, trading at its highest price since July 2024, before falling firmly. I have been long of this currency pair for a while, and trend traders will be too.
- Base Metals Copper and Tin continue to make new record highs, while Aluminum trades close to its recent high with a strong bullish case. A relatively accessible way to trade these industrial metals is to access ETFs such as CPER, TINM, and ALUM (the latter two are non-US and traded on the LSE).. Note that the CME offers a micro Copper future sized at only about $15,000.
- UK GDP data released earlier today showed a surprising rise by 0.3% month on month, when an increase of only 0.1% was widely anticipated.
- There will be a release of US Unemployment Claims later today.