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Gold rebounds near $3,350 as Fed cut speculation limits downside risks
Gold’s value has risen for the fourth consecutive day, finding support around $3,350, thanks to a weaker US Dollar. After some early troubles in Europe, buyers pushed prices up from intraday lows near the 50-day Simple Moving Average. Currently, Gold (XAU/USD) trades at about $3,380, showing a 0.20% increase during US trading hours. Market focus is now on US tariffs, which may impact global market stability.
Recent US PMI data showed mixed results, with the S&P Global Services PMI at 55.7, exceeding expectations, while the ISM Services PMI came in lower at 50.1. This suggests that the private sector remains resilient despite some setbacks. Following last week’s losses, markets have bounced back, driven by hopes for Federal Reserve interest rate cuts. The MSCI All-Country World Index and Nasdaq have risen along with other markets.
Trump plans to announce his Federal Reserve appointments, including the Fed chair, soon.
US President Donald Trump announced that a trade deal with China is close. He also plans to raise tariffs on imports from India soon.
He will soon announce tariffs on semiconductors and chips. Initial tariffs on pharmaceuticals will be low but could rise to 150-250% within a year.
Trump criticized Federal Reserve Chairman Powell as being very political and hinted at new candidates for Fed positions. However, US Treasury Secretary Scott Bessent wants to stay in his job.
After Trump’s comments, the US Dollar Index rose by 0.3% to 99.00. Tariffs are fees on imported goods that protect domestic industries by making local products cheaper.
Tariffs are different from regular taxes since they are paid at entry points. Some economists back tariffs to protect local businesses, while others warn they can raise prices and lead to trade wars.
Trump’s plan aims to strengthen the US economy by imposing tariffs on key trade partners like Mexico, China, and Canada. He hopes to use the revenue from these tariffs to lower personal income taxes.
Expect increased market fluctuations. The CBOE Volatility Index (VIX), which shows expected market turbulence, has been around 14.5, its lowest since 2025, indicating that options are relatively inexpensive. This could be a good time to buy protection or speculate on larger price swings in the upcoming weeks.
The US Dollar Index is strong and reached 99.00 following the news. With ongoing tariff discussions and pressure on the Fed, we expect this strength to remain against currencies like the Euro and Yen. Recent European data showing slowing industrial production adds to this outlook. We are considering long dollar positions using futures or call options on currency ETFs.
New semiconductor tariffs are likely to pressure that sector. The PHLX Semiconductor Index (SOX) has risen nearly 20% in 2025, making it susceptible to a drop due to news that could disturb supply chains. We are looking at buying put options on major chipmakers and related ETFs to prepare for a potential decline.
The proposed pharmaceutical tariffs are particularly aggressive, which could hurt company profits significantly. Looking back at trade disputes from the late 2010s, sectors targeted by tariffs tended to underperform for months. Buying put options on pharmaceutical ETFs is a smart way to protect against expected price drops.
A possible US-China trade deal contrasts with the new tariff threats against India. We see a trading opportunity here, preferring Chinese stocks over Indian stocks in the short term. This could be achieved by buying call options on China-focused ETFs while also buying puts on India-focused funds.
Any talk of replacing the Fed Chairman adds uncertainty around interest rates. The market is already reacting, with Fed Funds futures showing a greater chance of a rate cut before the year ends, up from just 15% a month ago. This indicates we should keep an eye out for chances in interest rate derivatives that may benefit from a more politically influenced Fed.
Jio’s financial services are back on track with Wave (5) after a correction of around 198.47 INR.
Jio Financial Services has started to rise again after hitting a low of 198.47 INR. This marked the end of a correction phase and the start of wave (5) in a larger Elliott Wave pattern, kicking off a bullish wave III.
Since reaching that low, the stock has gained significant momentum, creating a five-wave move in wave ((1)) of III. This recent wave began in April and includes an impulsive wave (1), a corrective wave (2), followed by a strong wave (3) and a small wave (4) pullback.
The latest breakout indicates that wave (5) of wave ((1)) is in progress. More gains are expected before we enter a larger wave ((2)) correction. A key level to watch is 198.47 INR; remaining above this level means any dips are corrective and could be good buying opportunities.
The current rally is part of a larger bullish cycle that began after the March low. It is wise to monitor wave (5), as minor pullbacks may provide good chances for long positions as wave III continues.
Jio Financial Services has resumed its uptrend, and we see this momentum as part of a bigger bullish cycle. The stock has been strong since the March 2025 lows, indicating a new primary rally. As of early August 2025, the price has climbed above 390 INR.
This upward move is backed by solid developments, including strong first-quarter earnings for fiscal year 2026 released last month. Assets under management (AUM) grew by 22% from the previous quarter, surpassing market expectations and boosting investor confidence. Overall market sentiment is positive, with the Nifty 50 remaining above 25,000 for several weeks.
In the coming weeks, buying call options on minor dips is a smart strategy. This approach allows traders to benefit from the anticipated push in the smaller wave pattern. Watch for shallow pullbacks to the 375-380 INR range as potential entry points for short-term call positions expiring in September 2025.
However, we should also be ready for the larger corrective wave ((2)), expected after this rally ends. As the stock approaches significant resistance near the 420-430 INR zone, consider taking profits on long positions. It’s wise to explore protective put options to guard against a potential sharp decline.
Since the critical support level of 198.47 INR is still well below the current price, selling out-of-the-money puts can generate extra income. A bull put spread, such as selling the 360 INR strike and buying the 350 INR strike for the September 2025 series, offers a defined-risk way to bet on the price staying above these levels. This strategy benefits from both the upward trend and time decay.
Keeping a close eye on price movements is essential as this wave nears its end. Look for signs of exhaustion, like lower volume on new highs, which could signal the start of a larger pullback. Historical data from other fast-growing financial firms in 2022 and 2023 shows that after rapid growth, corrections can happen quickly.
UBS expects the Federal Reserve to cut rates by 100 basis points by early 2026.
**UBS Predicts Rate Cut**
UBS sees potential opportunities even amidst policy and geopolitical challenges while waiting for uncertainties to clear. Their forecast comes after a recent jobs revision that raised expectations for a Federal Reserve interest rate cut.
Goldman Sachs also suggests a possible rate cut of up to 50 basis points in September, pending further job market weaknesses. This aligns with wider economic trends and strategic responses to current market situations.
The Federal Reserve may cut interest rates as soon as September, prompting us to consider interest rate derivatives that would profit from this shift. The latest jobs report has changed the outlook significantly, with the CME FedWatch Tool now indicating over a 70% chance of a cut at the next meeting. This emphasizes the need to prepare for lower rates in the upcoming weeks.
**Impact of Rate Cuts**
In the past, rate cuts that occurred without a recession have generally boosted stock prices. This makes bullish derivative strategies on major indices appealing. Looking back at the market rally that followed the Fed’s rate cuts in 2019 can offer insights into expected outcomes. Purchasing call options on the S&P 500 or Nasdaq 100 with expiration dates in late September or October could help capture potential gains.
This expected policy change could also weaken the US dollar, creating chances in forex derivatives. The US Dollar Index (DXY) has already dropped from its July peak of about 106.50, as traders begin to factor in the rate cut. We might consider long positions in currency pairs like EUR/USD or taking short positions against the dollar through futures contracts.
We must get ready for a rise in short-term volatility as the Fed’s decision approaches. The CBOE Volatility Index (VIX) has been relatively stable near 15, but it’s likely to rise as the September meeting nears. Buying options can help us take advantage of market gains while managing risk in this unpredictable environment.
Since today is August 5th, timing is crucial to avoid losing value from time decay on options. Focus on contracts that expire after the September Fed meeting to give our strategy adequate time to develop. This ensures we are set to benefit from the market’s advance once the rate cut is confirmed and the current uncertainties fade.
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US Services PMI shows slight expansion but indicates broad weakness, with tariffs significantly impacting trade.
The ISM non-manufacturing PMI in the US dropped to 50.1, slightly above the crucial 50 mark, showing only slight growth. Seven out of ten components declined, with imports and new export orders falling into contraction due to tariff issues.
Major US stock indices closed lower. The Dow Jones fell 0.14% to 44,111.74, the S&P dropped 0.49% to 6,299.19, and NASDAQ lost 0.65%, closing at 20,916.55. Crude oil futures ended at $65.16, while Citi forecasts gold to reach $3,500 per ounce within three months.
US Treasury Auction and Yield Movements
The US Treasury auctioned $58 billion in 3-year notes at a yield of 3.669%. Yields rose for 2-year notes to 3.724% and 5-year notes to 3.776%, while the 30-year yield fell to 4.777%. President Trump addressed several topics, labeling some survey data as outdated. He discussed employment numbers, trade tariffs, and foreign policy, asserting his impact on energy prices and international trade commitments. The USD had mixed results, with EUR/USD moving lower after discussions about potential EU tariffs. There were also conversations about possible actions from the Federal Reserve, including a potential rate cut by UBS in September. The ISM Services index is barely growing at 50.1, a sharp decline from earlier this year. This indicates that the U.S. economy’s main driver is struggling, posing risks to the stock market. Derivative traders might consider buying puts on the S&P 500 or Nasdaq as a hedge against a potential downturn in the coming weeks.Yield Curve and Market Sentiment
The yield curve is flattening, as 2-year yields rise while 30-year yields fall, indicating a market conflict. Traders are facing ongoing inflation concerns while anticipating a slowdown, similar to the volatile periods of 2023-2024. This situation makes options on interest rate futures appealing to capture volatility without choosing a clear direction. We must seriously consider renewed tariff threats, especially regarding a potential 15-20% minimum tariff on EU goods and rates up to 250% on pharmaceuticals. These are serious warnings that could disrupt supply chains still fragile from the pandemic. Protective puts on pharmaceutical ETFs (XPH) and semiconductor ETFs (SOXX) might be wise investments. The prediction of gold reaching $3,500 an ounce in three months is highly optimistic and reflects increasing economic and geopolitical uncertainty. Such a rise from current levels would be reminiscent of the sharp price comeback in 2020. Buying long-dated call options on gold futures or related ETFs like GLD could provide substantial gains if this forecast holds true. The US dollar is showing mixed results, but the euro appears vulnerable due to the imminent tariff threats against the EU. Shorting the EUR/USD pair through futures or options seems like a smart strategy against rising trade tensions. This currency pair has reacted sharply to trade news, experiencing significant declines during earlier tariff rounds in the 2018-2019 period. While the Atlanta Fed’s GDPNow estimate has increased, we should pay attention to the weakening forward-looking survey data. Business activity, new orders, and employment are all losing momentum, with feedback from respondents blaming tariffs for delays in projects. This trend indicates that weaknesses could spread, making bearish positions on cyclical sectors like industrials and materials more attractive. Create your live VT Markets account and start trading now.Elliott Wave analysis suggests that Dow futures are nearing a peak before a decline.
The Dow Futures cycle, which began its low in April 2025, is coming to an end. We may see a final surge to finish this impulsive cycle. The one-hour chart shows wave (3) reaching a peak of 45,312. It was followed by wave (4), which pulled back to 43,467 in a zigzag shape.
Currently, wave (5) is forming as a smaller impulse. It starts from wave (4), where wave ((i)) hit 43,864 and wave ((ii)) pulled back to 43,542. We expect more highs until wave 1 of (5) ends, followed by a possible wave 2 pullback. Staying above 43,467 should encourage buyers and support further gains.
Eur Usd And Gbp Usd Analysis
The EUR/USD is hovering close to 1.1550 amid US ISM data. The ISM Services PMI fell slightly in July. The GBP/USD is moving below 1.3300 due to talks of potential rate cuts by the Fed in September and upcoming policy updates from the BoE. Gold is holding steady around $3,370 per ounce, facing pressure from gains in the US dollar and rising US yields. DeFi is gaining popularity as investors shift from Bitcoin to Ethereum and other cryptocurrencies, which increases total locked value and user engagement. The Euro area shows strength thanks to a US-EU agreement, but concerns about a rate cut persist. We see the potential for one last rise in Dow Futures to wrap up the cycle that started in April 2025. Traders might look to buy on pullbacks, using call options or long futures positions as long as the index stays above the crucial support level of 43,467. This outlook is supported by last week’s strong US jobs report for July 2025, which indicated a gain of 250,000 non-farm payroll jobs, easing fears of a deep economic slowdown. For EUR/USD, we are closely watching the 1.1550 level as a key pivot. The recent drop in the US ISM Services PMI to 53.5 in July 2025, down from 54.1 in June, suggests a slight slowdown in the US economy. This could create short-term long opportunities for the pair, especially if upcoming inflation data confirms this trend.Market Expectations And Strategies
We anticipate continued fluctuations in GBP/USD below the 1.3300 level. The market is currently pricing a 60% chance of a Federal Reserve rate cut in September 2025 after shifting away from its earlier hawkish stance. Traders should prepare for increased volatility around the next Bank of England announcement and consider straddles or strangles to profit from significant price moves in either direction. Gold seems limited around $3,370, challenged by a strong US dollar. The 10-year Treasury yield, which climbed to 4.75% last week, is a significant obstacle for non-yielding gold. We recommend waiting for a clear breakout above this level or a drop in yields below 4.5% before taking major long positions in gold derivatives. There’s a noticeable change in risk appetite in the digital asset market, with money moving away from Bitcoin. Data from July 2025 reveals that Ethereum-based futures volumes rose by 30%, while Bitcoin’s dominance index slipped by 4% to its lowest this year. Traders should focus on potential opportunities in Ethereum and promising DeFi tokens, which are likely to perform well soon. The Euro area shows some strength, but we remain wary due to the ongoing risk of a European Central Bank rate cut. The trade agreement on essential minerals finalized in June 2025 has boosted industrial sentiment, especially in Germany. Therefore, we advise hedging any long European equity positions until the ECB provides clearer guidance in their next meeting. Create your live VT Markets account and start trading now.Trump narrows Federal Reserve Chair selection to four candidates, including two named Kevin, and will announce Kugler’s replacement soon.
Trump has narrowed his choices for the Federal Reserve Chair down to four candidates. This list includes two individuals named Kevin, along with two others whose names have not yet been disclosed.
He plans to announce the new Federal Reserve Governor by the end of this week. This appointment will fill the role once held by Kugler.
Impact on Market Volatility
With the selection for the next Federal Reserve Chair down to four individuals, we expect a significant increase in market volatility. The uncertainty about future monetary policy will likely drive the VIX index, a measure of expected volatility, higher in the upcoming weeks. Traders should prepare by considering long positions in VIX futures or buying call options on volatility ETFs. The VIX has already risen to 18, up from a July 2025 average of 15. The potential candidates, including Kevin Warsh and Kevin Hassett from the 2020s, offer very different approaches to interest rates. A more hawkish choice could challenge the market’s current expectation of a 25-basis-point rate cut by the end of the year, as indicated by SOFR futures contracts. Traders are already using options to bet on significant market movements, purchasing straddles on Treasury bond ETFs like TLT, which will profit if bond prices change sharply in either direction. This uncertainty also affects equity and currency markets. A hawkish appointment could strengthen the dollar and put pressure on stock prices, making protective put options on the S&P 500 a wise choice. The options market reflects this concern, with the put-to-call ratio on major indices rising above 1.2, the highest level since the inflation scare in spring 2025.Reactions to the Announcement
The upcoming announcement of a new Fed Governor this week will be a crucial indicator of the administration’s outlook. The nominee’s perceived leanings as either a hawk or a dove will likely lead to immediate changes in short-term interest rate futures. We observed similar short-term market reactions to personnel changes during the 2017-2018 period, often signaling longer-term policy shifts. Create your live VT Markets account and start trading now.AMD’s stock rises about 2% thanks to mixed earnings and strong revenue
AMD’s earnings report showed mixed results. The adjusted earnings per share (EPS) was $0.48, slightly below the expected $0.49. However, revenue was strong at $7.69 billion, beating forecasts of $7.40 billion.
The company faced $800 million in inventory and related charges because of U.S. export controls. For the third quarter, AMD predicts revenue will reach $8.7 billion, higher than the anticipated $8.31 billion. They expect a GAAP gross margin of about 54%.
This revenue outlook does not factor in potential earnings from MI308 AI chip shipments to China due to regulatory issues. Following this announcement, AMD’s shares rose by about 2%.
Looking back at late 2022, AMD’s earnings report showed both challenges and strengths. The company faced significant inventory costs due to new U.S. export laws but gave strong guidance for the future. This created uncertainty, which can be leveraged by traders.
After such reports, implied volatility often drops as immediate earnings risks fade. This is a good time for traders to buy options at lower prices for upcoming weeks. The market is now processing this news and looking for the next big event.
The strong guidance back then hinted at an AI boom that boosted AMD’s stock throughout 2023 and 2024. Recent reports as of mid-2025 indicate AMD has captured nearly 35% of the data center AI accelerator market. Traders may consider buying call options to take advantage of this positive trend. The cautious forecast excluding MI308 sales to China turned out to be a smart choice.
Nonetheless, the inventory charge related to China highlights ongoing geopolitical risks. Given the tech tensions since the early 2020s, buying put options could be a wise move to guard against unexpected regulatory changes. This risk is crucial for the stock’s future performance.
For those wanting to minimize risk, a bull call spread could be a useful strategy. This involves buying a call option at a lower strike price and selling another at a higher strike price. This strategy limits potential profits but also lowers initial costs, making it a way to bet on moderate upward movement in the coming weeks.
The modest 2% increase in share price after the 2022 report indicates that the market was balancing both positives and negatives. Today, there’s considerable optimism about AI already priced into the stock after its significant rise. Any positive news in the coming weeks will need to be substantial to provoke another big move, as high expectations have become the norm.
US Dollar Index holds steady above 98.50 despite mixed signals from US PMI
The US Dollar Index (DXY) is holding above 98.50 after a drop last week, currently sitting at about 98.96. This comes after mixed results from US Purchasing Managers Index (PMI) data.
The S&P Global Services PMI for July is at 55.7, slightly better than the expected 55.2. The Composite PMI also improved, rising to 55.1 from 54.6. However, the ISM Services PMI dropped to 50.1, lower than the forecast of 51.5, with falls in both new orders and employment. The Prices Paid Index, however, increased to 69.9 from 67.5, showing ongoing cost pressures.
The DXY is settling after a two-month peak of 100.26, attributed to a weaker-than-expected US Nonfarm Payrolls report. The economy added only 73,000 jobs, below the 110,000 predicted, with job numbers for May and June revised down by 258,000. Now, there’s a 92% chance the Federal Reserve will cut rates by 25 basis points at its next meeting.
Adding to market uncertainty, the US has introduced new tariffs of 10% to 41% on imports from 70 countries, including India and Canada. US-China trade talks remain unresolved as the August 12 truce deadline approaches. There are also concerns about political interference in economic institutions, especially after President Trump’s dismissal of the Bureau of Labor Statistics Commissioner following the July jobs report.
Overall, the outlook for the US Dollar seems bearish due to weak labor data, possible rate cuts, and geopolitical risks. Federal Reserve comments in the coming weeks will be closely watched for hints about future policy changes ahead of September’s meeting.
Currently, the US Dollar Index is stabilizing around the 104.50 level after a strong performance last month. The market is reacting to mixed signals from the latest jobs report, which fell short of expectations, creating uncertainty for traders.
The July Nonfarm Payrolls report showed that 185,000 jobs were added, below the expected 200,000, raising concerns about economic strength. Additionally, the most recent ISM Services report showed the Prices Paid component rose to 58.6, indicating that inflation pressures are still present. This puts the Federal Reserve in a tough spot before the September meeting.
Due to this uncertainty, there is rising demand for options contracts on currency futures as traders prepare for possible volatility. The market now anticipates a 65% chance of a 25 basis point rate cut by the fourth quarter, suggesting a growing interest in betting on a weaker dollar.
We recall the market fluctuations during the US-China trade disputes of 2019, which similarly raised concerns about the dollar. Today’s tensions are different, focusing more on global supply chain shifts and new tech export regulations. These issues are adding risk and keeping dollar volatility higher.
The dollar is at a pivotal point, supported by ongoing inflation but challenged by signs of a slowing labor market and potential rate cuts. Upcoming comments from Federal Reserve officials will be crucial for shaping expectations, and traders will closely analyze their words for clues about the next policy change.
W&T Offshore reports Q2 loss of $0.08 per share, better than expected but down from last year’s results
W&T Offshore Inc. reported a loss of 8 cents per share in Q2 2025, which is better than the expected 14 cents loss but worse than last year’s 5 cents loss. Quarterly revenues fell to $122.4 million, below the estimated $137 million and down from $143 million last year. The improved earnings came from lower operating expenses, but these were countered by reduced production and lower oil-equivalent prices.
Production for the quarter averaged 33.5 MBoe/d, down from 34.9 MBoe/d last year and below the expected 34.5 MBoe/d. Oil production dropped to 1,259 MBbls from 1,382 MBbls, missing the estimate of 1,427 MBbls. Natural gas liquids output was 245 MBbls, down from 334 MBbls but above the estimate of 226 MBbls. Natural gas production rose to 9,285 MMcf, higher than last year’s 8,769 MMcf and the estimated 8,897 MMcf.
The average realized oil price was $63.55 per barrel, a decline from last year’s $80.29 and below the estimate of $65.57. NGL prices fell to $19.24, while natural gas prices rose to $3.75. Lease operating expenses increased to $25.20 per Boe. Net cash from operations reached $27.9 million, down from $37.4 million. Free cash flow also fell to $3.6 million.
W&T Offshore invested $10.4 million in resources and had $120.7 million in cash, with net long-term debt at $350.1 million as of June 30, 2025. The company expects production levels to remain unchanged for Q3 and the entire year. Operating expenses for Q3 are projected to be between $71.5 million and $79.3 million, with total annual expenses estimated at $280 million to $310 million. Capital expenditures are forecasted at $34 million to $42 million.
Currently, W&T Offshore has a sell recommendation. Other energy sector options, such as Antero Midstream and Enbridge Inc., are rated more favorably with buy recommendations.
Today is August 5, 2025.
Although W&T Offshore’s loss was smaller than expected, we are concerned about missed revenue and oil production targets. The company’s struggle to meet top-line goals and declining production points to fundamental weaknesses. Any short-term price increase from the better-than-expected earnings should be viewed with caution, as the overall business performance is declining.
The realized oil price of $63.55 per barrel is particularly worrying. As of today, WTI crude futures for September delivery are trading around $68 per barrel, which means W&T is receiving much lower prices than the market benchmark. This could indicate issues with their hedging program or the quality of their crude oil, worsening the effects of falling commodity prices compared to the $80.29 they received last year.
Looking ahead, the forecast for stable production does not suggest any immediate improvement. This stagnation follows a decline in production over the past year, highlighting a troubling operational trend. Combined with rising lease operating expenses, we see a clear path toward continued margin pressure.
Given this situation, we think that buying put options is a sensible strategy for the coming weeks. The stock has underperformed relative to the broader energy sector since early 2024, and this report doesn’t change that outlook. We are considering put options that expire in October and November 2025 to allow our bearish forecast to develop.
We also expect the stock’s implied volatility to decrease now that the earnings report is behind us. This creates an opportunity to sell option premiums, like through bear call spreads. The flat production guidance suggests a low likelihood of sudden positive surprises, making strategies that benefit from stagnant or slowly declining stock prices appealing.
