Gold prices are currently weakening. Yesterday, the precious metal ended the day flat as both the US dollar and bond yields moved higher. As we explained in today's US dollar daily update, inflation is likely to accelerate as a result of Trump walking away from the Iran nuclear deal. Thanks to US growth and inflation accelerating simultaneously, this means the Federal Reserve is more likely to continue raising rates. As gold trades inversely to real interest rates, this is a negative environment for the precious metal and explains why gold remains weak.
Today, gold prices continue to move lower. The US dollar index (a measure of the currency against its largest peers) is now positive for the year, while US yields continue to move up. 10-year US Treasuries are currently yielding 2.994%. Later today, we'll see the producer price index following by the consumer price index tomorrow. As inflation looks set to accelerate, gold prices are likely to remain weak. Our short-term and medium-term outlook on gold is bearish.
After its most recent bottom around $1,303, gold is now above $1,305.