Forex Today: Gold Breaks $5,100

Gold and Silver continue rising strongly to new record highs with Gold breaking $5,100 and Silver breaking $109.

1. Precious metals remain in focus as Silver continues to make massive gains, and Gold rises strongly to trade above $5,100 after easily breaching the psychologically significant round number at $5,000. Many analysts see these continuing bullish movements as caused by a perfect storm of fear of erratic US leadership/policies, trend FOMO, weak monetary policies, and geopolitical tensions over Iran. Whatever the reason, being long of precious metals, especially Gold and Silver, has been the most profitable trade available in recent months, and trend traders will be happily long. We are also seeing Platinum, and to a lesser extent Palladium, rise firmly to trade at new record highs, so trend traders will be interested in being long here too.
2. The other big story in the market today is central bank intervention concerning the Japanese Yen and the US Dollar. It started with the Yen, which has been making fresh long-term low prices against several currencies for many months now. This triggered a threatened market intervention by the Federal Reserve on behalf of Japanese monetary authorities late last Friday (a very unusual development), which sent the Yen higher after a week of losses. The Japanese Yen has started this week notably stronger, with Japan's Chief Cabinet Secretary Kihara stating that Japan will act in the line with the US-Japan joint statement and refusing to confirm whether the Bank of Japan had already intervened in the market to prop up the Yen. This means we may well see dramatic movements in the Japanese Yen, but they will be unpredictable. What often happens with a central bank trying to prop up its own currency is temporary success followed by a gradual reversion back to the original price area. So, some brave traders might want to try to fade any perceived intervention. I think it is quite possible that the Yen sees a gain this week against many currencies.
3. Over the weekend, President Trump threatened Canada with a new 100% tariff as it announced movement towards a major trade deal with China. This would have a dramatic impact if executed, but so far this is just an early-stage threat. The Canadian Dollar has started this weak very soft as a result, falling against almost every currency.
4. In the Forex market, since this week opened, the strongest major currency is the Japanese Yen, while the weakest major currency is the Canadian Dollar. There is a chance of a major bullish breakout in the EUR/USD if we see a daily close above $1.1866, while trend traders will mostly be looking to exit from a slow but long-term long position in the USD/JPY currency pair if it ends today below ¥154.60.
5. Stock markets are mostly flat or lower, notably the Japanese Nikkei 225 is down today by more than 1.5%. The S&P 500 Index remains within sight of its record high.
6. The USA and its allies in the Middle East have completed defensive preparations for a war with Iran, with some analysts in the region seeing a good chance that war will break out over the coming weekend. However, prediction markets suggest this is a highly unlikely development, and any war is still at least several weeks away. Some airlines have cancelled flights to the region. More reports are emerging from credible sources within Iran that the regime may have killed over 30,000 protestors, with some analysts measuring it as the fastest and most widespread killing since the Rwandan genocide of 1994.
7. There are no high-impact data releases due today, but it looks likely that we will see lively trading in several markets anyway, with volatility finally returning to the Forex market.