Table of Contents
Veteran market analyst Gareth Soloway has issued a broad warning regarding immediate corrections across precious metals and cryptocurrencies, identifying technical exhaustion signals in Silver and Gold alongside concerning bearish patterns in the US Dollar and Bitcoin. Speaking on a recent market breakdown, Soloway outlined a scenario where exhausted buyers and macroeconomic shifts could trigger double-digit percentage drops in commodities and a retest of support levels for risk assets before long-term trends resume.
Key Takeaways
- Silver Volatility: Soloway identifies a "blow-off top" in Silver prices, predicting a potential 20% to 30% correction toward the $75–$90 range.
- Gold’s Trajectory: While long-term bullish due to central bank buying, Gold is hitting channel resistance and may retrace to approximately $4,500.
- Dollar Weakness: The US Dollar Index (DXY) is forming a "bear flag," signaling a potential breakdown from a decade-long support channel.
- Bitcoin Correlation: Currently trading as a risk asset rather than a safe haven, Bitcoin could test the $67,000–$72,000 range if equity markets soften.
- Equity Risks: The S&P 500 faces resistance at the top of its pricing channel, with a possible pullback target of 5,500 points.
Precious Metals: The Blow-Off Top
Following a dramatic 24-hour period where Silver peaked near $118 before dropping 13%, Soloway indicates that the metal has likely hit a short-term ceiling. Technical indicators point to a "tail candle" on the charts—a classic sign of buyer exhaustion followed by seller dominance. While the long-term thesis for Silver remains intact due to industrial demand and scarcity, the immediate outlook suggests a sharp cooling period.
According to Soloway, Silver is likely to retrace to its November trendline support around $90. If that level fails to hold, the correction could extend to $75 or $76, representing a roughly 30% decline from recent highs.
"This signal should be the start of at least a 20% drop... It is a classic blow-off top. Buyers are exhausted, and sellers have taken control."
Gold is exhibiting similar behavior, hitting the top of a parallel channel. Soloway argues that if Silver corrects significantly, it is statistically unlikely for Gold to continue rallying in isolation. He forecasts a short-term pullback to the $4,500 level, though he maintains a bullish long-term floor of $3,500, driven by global central banks diversifying reserves away from the US Dollar.
Currency Markets and Macroeconomic Headwinds
A significant portion of Soloway’s analysis centers on the US Dollar Index (DXY), which is currently testing the lower bounds of a long-term channel dating back to the 2008 financial crisis. The chart is displaying a "bear flag" pattern, suggesting a high probability of a downward break. This technical weakness coincides with geopolitical shifts, as nations increasingly diversify their holdings away from US Treasuries.
The implications of a weakening dollar are compounded by rising yields on the 10-year Treasury note. Soloway notes that despite expectations of Federal Reserve rate cuts, long-term market rates are rising—a phenomenon driven by supply and demand rather than Fed policy. With foreign ownership of US debt dropping from 40% a decade ago to roughly 15% today, the US faces a challenging environment of rising debt service costs.
Bitcoin and the Identity Crisis
Contrary to the "digital gold" narrative, Bitcoin continues to trade in tight correlation with high-risk assets. Soloway points out that Bitcoin is forming a bear flag pattern nearly identical to that of the US Dollar and Oracle stock. The cryptocurrency has repeatedly failed to break trendlines established during the 2017 and 2021 market peaks.
The analysis suggests that Bitcoin's price action is currently dictated by liquidity flows similar to tech stocks. If the S&P 500 undergoes a mild correction of 10-20%, Bitcoin is expected to find strong support between $67,000 and $72,000. However, a severe recessionary crash could push prices lower.
"If it’s not a store of value, I don’t know what it is... Every day gold goes up and Bitcoin doesn't is a bad day for Bitcoin because it tells us we are still holding on to a narrative that isn't playing out."
Equity Markets and the AI Trade
The broader equity market, specifically the S&P 500, sits at the upper limit of a pricing channel established during the COVID-19 recovery. Unless the index can decisively break out into price discovery mode, a reversion to the channel's mean—around 5,500 points—is the statistically probable outcome.
Soloway also highlighted weakness in the technology sector. While Nvidia remains a market leader, other semiconductor giants like Micron face potential margin compression due to oversupply from new factory construction. Furthermore, large-cap tech companies like Oracle and Meta are showing chart patterns indicative of capital outflows, mirroring Bitcoin's recent stagnation.
Looking Ahead: Inflation and Fed Policy
Investors should prepare for renewed inflationary pressures in the second half of the year. Rising costs in commodities such as cattle, silver, and copper act as leading indicators for broader inflation. This presents a dilemma for the Federal Reserve: the need to cut rates to support a weakening economy while inflation creeps back up.
Soloway warns that the incoming political administration may face friction with the Federal Reserve, potentially leading to a disjointed monetary policy that confuses markets. As long-term yields decouple from the Fed Funds Rate, the traditional levers for economic stimulus may prove less effective than in previous cycles.
){kind=link}