The short-term bear market in gold continues, alongside weakness in other safe havens such as the Japanese yen and the Swiss franc. Despite the dollar's limited strength in the past few days, gold has been selling off sharply on rising rate hike expectations. Given gold's sensitivity to real interest rates, the precious metal weakens when the market prices in higher future interest rates. Yesterday, rate hike expectations rose following news reports that Trump held a straw poll among Republican senators regarding the next Federal Reserve Chair. Given that most Republicans supported John Taylor, gold sold off on the news. Taylor is well-known for his beliefs that interest rates should be higher.
Looking at technical indicators, gold is neither overbought nor oversold today and is trading within normal conditions. After its most recent top above $1,300, gold is now below $1,272. Our short-term and medium-term outlook on gold remains bearish.