Weekend scenario map: growth, inflation, and the dollar

XAUUSDIf the AI bubble bursts, investors will look for somewhere else to hide, and many will turn to gold as a safe haven during periods of uncertainty and equity drawdowns.

I repeated this every few days throughout Q1, and it is worth repeating now. Gold tends to outperform before and after a crisis but trades like a risk asset during one. Once the floodgates open, nothing survives, including gold. The evidence that the AI bubble is beginning to burst is becoming increasingly clear. If it does, gold will likely fall with equities instead of acting as a safe haven.

This is especially true in the current macro setup. The SPR is still being drawn at a historically rapid pace, with inventories sitting near multi-decade lows. Hormuz traffic shows no sign of normalizing, and the 3-2-1 crack spread continues to hit record highs. Oil and refined products are keeping inflation pressure alive and pushing yields higher, adding another direct headwind for gold.

As I said a few weeks ago, gold must decouple from yields and the dollar before it can stabilize and start grinding higher. This remains the most important signal for anyone eager to buy gold dips.

Technically, 3.9K-4K remains solid ST support. I expect the descending triangle to resolve over the next week or two. If my view that the AI bubble is beginning to burst proves correct, the triangle will likely resolve lower unless gold can decouple from the dollar, which should rally during a sharp equity selloff.

XAUUSDGold bounced from our 3.9K-4K support and is trying to stabilize. As long as 4K holds, downside pressure is contained and gold can push back toward 4.4K. A sustained close above 4.4K opens the door to a larger rebound. Lose 3.9K-4K, the next major support sits around 3.7K, followed by 3.4K.