Gold is slightly weaker today after rising sharply last Friday. Given the uncertainty of the upcoming Senate tax vote, the US dollar is likely to stay subdued until the event. Tax cuts are a significant concern for the dollar as lowering taxes improves the outlook for inflation. The dollar tends to strengthen when inflation accelerates (particularly in today's high-growth environment) as markets anticipate more rate hikes by the Federal Reserve. As the probability of tax cuts remains a question mark, gold is likely to remain supported. Our short-term outlook on gold is bullish, and the precious metal is trading within normal conditions today.
After its most recent top above $1,300, gold is now above $1,291.