The 10-year hit 5% earlier in the week. By Friday it was sitting near that level without extending. The dollar index held near a multi-week high but was not launching a new leg. Gold has been trading against yields and the dollar all week. Friday was the first session where neither one was actively making a new high while gold was trying to rally. The short side ran out of new ammunition and the result was a move from $4,334.295 to $4,399.67 in one session.

The Weekend Still Carries War Risk

Visible vessel traffic through the Strait of Hormuz remains far below normal. Saudi infrastructure is damaged. The conflict between Iran, Saudi Arabia and the Houthis is active. Washington and Tehran have not restarted peace talks. A more reliable Saudi route through Oman eases the immediate supply panic. It does not guarantee the next attack misses loading infrastructure. The oil correction gave gold its rally Friday. A weekend escalation puts crude right back at the highs and gold would have to deal with the inflation argument all over again on Monday.

What to Watch

Crude has to stay below this week’s highs for gold to keep the ground it gained Friday. A renewed push in oil prices brings the inflation argument back and gives yields a reason to break above 5% again. That would put the entire post-Fed relief trade at risk. The weekend is the immediate threat. The conflict is active and one headline from the Strait can reverse three days of falling crude before Monday’s open.

The bias leans bearish with the main trend still down on the daily swing chart, however, the move through the 50-day moving average at $4,288.76 and the minor trend change have taken the conviction out of the bearish case. The minor retracement zone at $4,373.05 to $4,405.59 is the pivot. Friday stalled there. A sustained push through $4,405.59 opens the larger zone at $4,466.14 to $4,520.65 with the 200-day at $4,541.23 above it and that is where the trend change conversation starts.