Listen to John Meynard Keynes!
$4000 gold? Told you so!
Another week, another curveball from Washington. The U.S. government shutdown rolls on and while Main Street may be feeling the squeeze, Wall Street seems to be partying like it’s business as usual. Stocks once again defied logic, posting fresh record highs across the Dow, S&P, and NASDAQ, each up around 1.3% on the week.
You’d think a partial government shutdown would spook risk sentiment but apparently, traders didn’t get the memo. Meanwhile, the Non-Farm Payrolls report, normally out on the first Friday of the month, was postponed due to the shutdown. That means we’ll have to wait until Friday for a proper read on the jobs market, a delay that only adds to the tension.
Behind the scenes, though, cracks are showing. The ADP report hinted at a weakening labor market, giving the Fed even more reason to accelerate rate cuts later this year. The FedWatch tool now shows a 90% chance of a 50 bp cut by December, a clear sign the market’s betting on policy easing sooner rather than later.
Gold on Fire
Amid the chaos, Gold surged to record highs, driven by the flight to safety. With prices now brushing up against that $4,000 target I mentioned a few weeks ago, volatility is ramping up fast. That level’s not just psychological, it’s a magnet for profit-taking and a stop zone for shorts.
And let’s not forget Silver (XAGUSD). While Gold’s gained roughly 13% since September, Silver has been the real overachiever, up nearly 23%. Both metals are classic safe havens, but Silver’s cheaper entry point makes it more accessible for retail traders. Should Gold break decisively above $4,000, Silver could be next in line for a serious breakout.
Stocks Still in Fantasyland
Despite the backdrop of a shutdown and a shaky jobs picture, risk-on traders are in full control. Every indicator screams “overbought,” but the market just keeps marching higher.
I keep hearing talk about stretched RSI levels, looming corrections, and bubble territory. But it is in times like this I often recall a famous trading quote by John Maynard Keynes
“The markets can remain irrational longer than you can remain solvent.”
A hard truth for anyone who’s tried to fade this rally, whether it’s Gold or equities or even Bitcoin…
Japan Joins the Risk Parade
Over in Asia, Japanese stocks hit record highs after Sanae Takaichi was confirmed as the likely next Prime Minister. She’s widely seen as a dovish policymaker, favoring continued loose monetary policy, meaning rate hikes are off the table for now. The Yen tumbled nearly 2.5% on the news, underlining just how comfortable markets are with more liquidity.
Bitcoin Back in the Spotlight
It wasn’t just metals catching a bid. The safe-haven narrative spilled into crypto, with Bitcoin up nearly 12% on the week. The digital gold seems to have found its footing again as traders look for alternatives amid U.S. political and fiscal uncertainty.
The Week Ahead
Expect volatility to stay elevated. The ongoing U.S. funding crisis remains the big catalyst, and all eyes are on Friday’s delayed NFP release.
I’ll be streaming the NFP live, complete with a free assessment account giveaway during our NFP Trivia event:
Consensus calls for +54.6K jobs, but if that number undershoots, expect the dollar to wobble and rate-cut bets to surge, possibly giving risk assets another leg up.
We’ll also hear from the RBNZ midweek, where a cut from 3.0% to 2.75% looks highly likely.
So, buckle up, it’s shaping up to be another wild week. I’ll be taking a cue from Mr. Keynes and riding the trends and sticking to what I teach in PropIQ, trade the strategy, trust the strategy and give those stops a little breathing room when volatility turns up
Disclaimer
This market commentary is provided for educational and informational purposes only. It reflects the opinions of the author at the time of writing and should not be taken as financial or investment advice.
Funded Trading Plus operates evaluation and simulated funded programs, not live trading accounts. All references to trading, strategies, or market opportunities relate to simulated trading environments. Past market performance or individual trader results are not indicative of future outcomes.
About Andrew Lockwood
Andrew Lockwood is a seasoned professional trader with over 40 years of experience in financial markets. Starting his career on the floor of the London International Financial Futures Exchange (LIFFE) in the 1980s, Andrew has traded through multiple market cycles and volatility regimes. Today, he specialises in prop trading strategies, focusing on technical setups, risk management, and trader psychology. As the founder of PropIQ and a leading mentor, Andrew is dedicated to training the next generation of prop traders with proven, real-world trading methods.