Gold prices are down today. Last week, the precious metal fell sharply as the US dollar strengthened. The dollar initially gained thanks to rising bond yields. In an environment of relatively higher US GDP growth and rising inflation, the dollar is being supported by rising US rate hike expectations. Later in the week, the dollar strengthened further after the European Central Bank failed to outline the end of its asset buying program.
Looking at gold prices today, the precious metal is selling off despite very limited moves in currencies and bond yields. The US dollar index (a measure of USD against its major peers) is fairly mixed, while US Treasury yields are only slightly higher. For now, the move in gold looks out of sync with the move in related asset classes. Last week, we published a longer commentary on gold arguing that the outlook is worsening thanks to strength in the US dollar. Following the recent sell-off, our short-term outlook on gold is now bearish, while our medium-term outlook is neutral.
After its most recent top around $1,353, gold is now above $1,319.