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Gold remains weak thanks to dollar strength, short-term outlook looking less bullish

Gold daily update


Gold daily update

It's another weak day for gold, thanks to strength in the US dollar. Yesterday, the precious metal was down sharply as both bond yields and the currency strengthened simultaneously. Following yesterday's auction of US Treasury securities, most US Treasury yields are flat today. Today is a critical day for gold thanks to upcoming FOMC minutes. As we wrote in our  US dollar daily update, the Federal Reserve is expected to signal more rate hikes in 2018 thanks to improving jobs numbers, growth and inflation. All else held equal, gold tends to weaken when the Fed signals higher interest rates as the precious metal trades inversely to real rates. In a commentary published yesterday, we argued that the longer-term gold bull market is likely to continue. While the precious metal has been weak this month, economic conditions support continued strength in gold. While we are likely to downgrade our short-term outlook on gold to neutral in the coming days, our medium-term outlook remains bullish. 

After its most recent top around $1,353, gold is now above $1,326.


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