Gold prices are currently flat after falling sharply yesterday. As we wrote in our US dollar daily update earlier today, the buck rose sharply following Federal Reserve Chair Jerome Powell's testimony to the US Congress. Thanks to his upbeat outlook on the economy (specifically: improving data, tax cuts and the likelihood of wage acceleration this year), markets are betting on the possibility of four or more rate hikes this year. As a result, both US Treasury yields and the US dollar strengthened yesterday, hurting gold prices. While fears of inflation and a response from the Fed continue to weigh on gold, we maintain our view that the risk from accelerating inflation (and four rate hikes) is not particularly high for reasons we explained in a longer commentary on gold. Later this week, we'll see Core PCE figures that should provide further cues for inflation this year. Our short-term outlook on gold is neutral, while our medium-term outlook remains bullish.
After its most recent top around $1,353, gold is now above $1,319.