Comments from Vijay Valecha, Chief Investment Officer, Century Financial
Global markets witnessed a volatile but broadly constructive session as equities rebounded sharply, geopolitical tensions continued to influence commodities, and the US dollar regained footing amid shifting interest-rate expectations and safe-haven demand.
US Markets: Relief Rally Driven by Positioning, Not Conviction
US equities staged a strong rebound, with the S&P 500 rising 2.51% and the Nasdaq 100 advancing 2.8% during the session. However, gains faded partially as geopolitical uncertainty resurfaced after reports of renewed tensions between the US and Iran regarding a ceasefire agreement.
According to Vijay Valecha of Century Financial, the rally was largely technical in nature—driven by short covering and under-positioned investors rather than strong fundamental conviction. He cautioned that underlying macro risks remain elevated, including:
- Increasing debt dependency in AI-related capital expenditure
- Stress signals in private credit markets, including a negative outlook revision by Moody’s on Blue Owl’s flagship fund
- Rising bank exposure to private market intermediaries, estimated at around $348 billion
Technical Outlook
The index held above its 50-day SMA near 6,752, forming a potential bull flag on the 4-hour chart. Key levels include:
- Resistance: 6,772 → 6,806 → 6,850
- Support: 6,752 → 6,710 → 6,673 (200-day SMA)
The broader structure suggests a range-bound market between 6,670–6,850, where flows and positioning may dominate near-term direction.
US Dollar: Safe-Haven Demand Returns
The US Dollar Index (DXY) ended near the 99 level after briefly touching a one-month low near 98.52, before recovering on renewed safe-haven demand.
The dollar strengthened as geopolitical tensions resurfaced and investors reassessed expectations around US monetary policy following the latest Federal Reserve communications. The FOMC minutes reinforced a “wait-and-watch” stance, with most policymakers favoring unchanged rates.
Market pricing, reflected in the CME FedWatch Tool, showed a rebound in expectations that rates will remain unchanged through year-end.
Technical Outlook
- Immediate support: ~98.50–98.80 zone
- Key resistance: 99.16 → 99.48 (21-day EMA)
- Momentum bias: constructive if above 99.16
Crude Oil: Geopolitical Risk Drives Sharp Volatility
Oil markets experienced extreme volatility:
The WTI Crude Oil plunged over 13% intraday before rebounding sharply to settle near $97, with further gains in Asian trading pushing prices higher.
Key drivers include:
- Escalating geopolitical uncertainty between the US and Iran
- Disruptions and restrictions in shipping through the Strait of Hormuz
- Reports of reduced vessel movement and congestion involving hundreds of tankers
Iran’s reported restrictions on vessel movement and disputed ceasefire conditions have intensified concerns over global supply chains.
Technical Outlook (WTI)
- Key support: $91.73 (critical floor)
- Intermediate support: $93.48
- Resistance: $104 → $109.74
Bias remains bullish as long as prices stay above $91.73.
Brent crude also remains elevated, with resistance near $109.55 and support around $92.
Gold & Silver: Holding Up Despite Profit-Taking
Gold retreated from recent highs near $4,840 after failing to sustain levels above $4,800, but remains structurally supported.
The metal continues to trade within an ascending channel, with $4,700 emerging as a crucial support zone.
Valecha highlighted that macro drivers remain mixed:
- Ongoing geopolitical uncertainty, though slightly eased
- Fluctuating oil prices and a firmer US dollar as key pressure variables
- Market focus on upcoming diplomatic discussions in Islamabad involving US leadership
Technical Outlook (Gold)
- Support: $4,700
- Resistance: $4,800 → $4,900+
- Trend bias: bullish while above $4,700
Silver also pulled back after a recent rally but remains constructive:
- Key support: $73
- Upside targets: $77.5 → $80
- Breakdown risk: below $73 may trigger range-bound movement ($73–$69)
Conclusion
Markets are currently being shaped less by macro conviction and more by positioning shifts, geopolitical developments, and technical levels.
While equities are stabilizing after a strong rebound, oil remains highly sensitive to supply disruptions, the dollar is regaining strength on safe-haven flows, and precious metals continue to hold key structural supports despite volatility.
The near-term outlook across asset classes remains range-bound but event-driven, with geopolitical headlines likely to dominate price action.
