The gold market has a lot going against it at this time (note: “at this time”)
This is a non-comprehensive view of the gold market and what is in store. Please take it as such. The real work will be done in weekly NFTRH reports and in-week updates, as always. And there is a lot of it that needs to be done to correctly define the “top-down” macro and gold’s place within it.
There are so many factors, clues and data points that need to come together in right-minded market analysis to form a dependable narrative. Especially at a time like today with a war going on, the stock market looking at its summer correction and the precious metals deep in correction already.
Negative Current Macro
Two negatives for the current gold price are the 10-2yr Yield Curve and 10yr “real” yields.
The curve has been flattening for most of 2026. While it is not a consistent relationship, gold tends to be more bullish during a curve steepening, especially if the steepener is inflationary. The current flattening implies policymakers in control as stewards of the system But it is just an intermediate move so far, and it has not inverted (below zero).
We originally planned for a 2026 gold market correction that would be measured in months. That is thus far the script of this intermediate flattening. If the curve aborts its flattener and starts to steepen, gold will likely have a tailwind gathering.
“Real” Treasury yields are climbing in a similar intermediate way to the yield curve above. That is a signal for those who want to suspend disbelief that the US government is not a chronic inflator (good one, G!) to instead interpret sound monetary policy overseeing a sound currency.
Playing it straight, that is the current market signal here. I am all about following market signals even when they signal things I know not to be true in practical reality. Why again is Notes From the Rabbit Hole (NFTRH) named after Wonderland and its odd interpretations of reality?
Bessent and his shiny new Fed head Warsh are at work, cooking up a macro that is “just right” to Goldilocks’ taste. It’s up to us to a) not get damaged by that cooking, b) to “play” or game them, and c) to be ready when the tricks are exposed.
It is that exposure of the tricks that is what gold does. That is because gold is monetary honesty. It can’t be anything else because it does not do anything other than sit on its shiny heavy ass and measure what is going on around it.
Warsh & Bessent
Aside from the usual tricks involving Treasury bonds and the MMT TMM (total market manipulation) involved in managing their monetary/market signals, our cunning monetary brains will be operating in tandem with a something that we noted would likely be the case back on July 13th.
Commercial Bank Deregulation Upcoming?
Fly Little Piggies, Fly!
It was upcoming alright, and now it is reality. The House Committee on Financial Services has enacted:
Financial Services Committee’s Main Street Capital Access Act Passes House
Now, this is not negative. It is quite positive, in my opinion. As long as its spirit is adhered to. That spirit being to set the little pigs free from the constraints imposed on the big bloated pigs after they nearly wrecked the system in 2008. In other words, the theme is that regional banks are pillars of their communities and should not be operating under government regulation fit for the large abuser banks.
The problem? Once this cat is out of the bag, once this door is opened, it can’t belong before the real pigs are allowed to muzzle up to the trough and feed. Give it time.
In the near-term I see this as another at least theoretical negative for gold because it is going to be economically beneficial. However, commodities should benefit as they are economically cyclical. And using the 2003-2007 phase as a de-regulated blueprint, gold did just fine back then. Just not as well as silver and many commodities.
Bottom Line
Gold is fine. The correction was anticipated because frankly, it was needed. The macro has swung back toward a state of sound monetary signaling. “Signaling”, not reality. But the Fed is smart now, offloading some of the economic reflation burden to commercial banks and in particular, the regional banks.
But inflation is not only still a thing, it is a thing that will very likely be wooed once again, just as it was in 2003-2007, prior to an epic crash and liquidation of financial markets. In the meanwhile, if past is prologue, gold will be an also-ran, but still bullish. Then it will be ready to collect liquidity, Q4 2008 style, when the time comes one day.
So yeah, gold is fine.
