Gold prices have strengthened in the past 24 hours following US inflation data. While the February consumer price index met expectations (2.2%), key components such as rental and healthcare costs showed slowing growth. As a result, the outlook for future inflation is weaker. US Treasury yields fell after the data was announced, while the US dollar sold off. Unsurprisingly, gold powered higher. Looking at 10-year US Treasuries, the bonds are currently yielding 2.835% after peaking above 2.90% earlier this week. Today, the precious metal is taking a breather and is currently trading sideways. We expect gold to keep strengthening as long as prevailing economic conditions remain in place. Our short-term outlook on gold is neutral, while our medium-term outlook remains bullish.
After its most recent top around $1,340, gold is now above $1,325.