Gold fell sharply yesterday, and remains in a bearish trend. In an environment of rising GDP growth and rising inflation expectations, gold is likely to remain weak for the foreseeable future. Yesterday the House of Representatives passed the Senate's budget resolution, which makes Trump's tax reforms much more likely. As investors grow more optimistic on Trump's economic agenda (which includes fiscal spending, healthcare reforms and a larger military budget), inflation expectations are rising. This was followed by news from Politico confirming that Powell and Taylor are the leading candidates for the Fed Chair role. If Taylor becomes the next Fed Chair, expect gold prices to fall sharply on expectations of higher interest rates.
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 $1,267. Our medium-term outlook on gold remains bearish.