Gold enjoyed a small rebound last Friday and continues to move up this morning. While gold has been strengthening for the last two days, the overall trend remains bearish. After last week's sharp sell-off, we will downgrade our medium-term outlook to bearish later this morning. In a commentary published last week, we showed that gold speculators are starting to lose faith in the precious metal. Looking at speculator net positioning on futures markets, many liquidated their long gold positions last week. After ignoring signs of inflation, gold traders are following Japanese yen and Swiss franc traders who reduced their long positions a few weeks ago. As inflation expectations head up thanks to the US tax bill, Trump's infrastructure spending plan and an ongoing crude oil rally, the possibility of future rate hikes is dampening the outlook for gold.
After its most recent top around $1,299, gold is now below $1,251.