Gold prices are slightly higher today. Yesterday, the precious metal sold off sharply as US Treasury yields soared alongside the US dollar. Looking at recent trading patterns, volumes on futures and options exchanges have been falling over the past few sessions (despite the accelerating sell-off). This is a good sign, as it suggests that bears do not have a lot of conviction in the move lower.
While 10-year Treasuries came close to yielding 3.0% yesterday, they ultimately ended the day lower. As we have written in previous editions of the gold daily update, rising inflation is driving bond yields higher. As holding US dollar-based investments becomes relatively more attractive (i.e. as real interest rates rise), gold prices are falling as a result. Looking at gold today, the precious metal is enjoying a small rebound as US Treasury yields fall and the dollar trades sideways. After peaking just below 3.0% yesterday, 10-year Treasuries are currently yielding 2.965%. The US dollar is fairly mixed, following yesterday's surge. Our short-term outlook is neutral, while our medium-term outlook on gold remains bullish.
After its most recent top around $1,353, gold is now above $1,325.