Gold prices are currently slightly higher. Yesterday, the precious metal fell sharply and closed below $1,300/ounce. Following April US retail sales figures, US bond yields soared, sending the US dollar up in response. The 10-year US Treasury bond is currently yielding 3.063%. As dollar-based investments become more attractive (thanks to rising real yields), precious metals are losing their luster. The US dollar has been particularly strong this year as the outlook for US growth remains high relative to other major regions. Between rising yields and a stronger currency, year-to-date returns in gold have dipped into negative territory.
Looking at gold trading today, the precious metal is enjoying a small rebound. After yesterday's big moves, both the US dollar and US Treasury yields are looking overbought in the short-term. As a result, we expect continued relief for gold prices. Over the coming weeks, the outlook for gold remains bearish as both US growth and inflation are stoking fears of more rate hikes. Until US growth meaningfully deteriorates from today's elevated levels, gold should continue weakening. Our short-term and medium-term outlook on gold remains bearish.
After its most recent bottom around $1,303, gold is now above $1,294.