Gold Daily Updates

11 October 2017

Gold has done well in the past few days, mirroring the fall in the US dollar. After hitting overbought conditions earlier this month, the dollar is selling off on concerns that Trump is struggling to get Republicans on board for his tax reforms. Recent moves by the People's Bank of China to weaken the dollar (in order to strengthen the Chinese yuan) has also led to broad dollar weakness.

Looking at geopolitical risks, Trump recently tweeted the fact that talking to North Korea "hasn't worked" in the past, suggesting that "only one thing will work". On Monday, Trump again tweeted that "Our country has been unsuccessfully dealing with North Korea for 25 years, giving billions of dollars & getting nothing. Policy didn't work!" While his intentions are unclear, rising political tensions can strengthen gold prices in the short-term.   

After almost breaching oversold conditions last week, gold is currently trading within normal conditions based on technical indicators on a daily chart. After its most recent bottom close to $1,270, gold is now above $1,289. 

Updated 
Short term outlook
Bullish

After rebounding from oversold conditions in early October, we are now bullish on gold in the short-term. We previously warned that the precious metal was looking oversold and due for a rebound. The precious metal has since re-entered normal trading conditions, based on various technical indicators on the daily chart. 

Medium term outlook
Neutral

Looking at the medium term picture, we are now neutral on gold after the precious metal rose in the second week of October. The US dollar is broadly correcting based on renewed concerns that Trump may not be able to pass the tax plan, and given recent strength in the euro and the Chinese yuan. Today, prices have re-entered normal trading conditions when looking at various technical indicators, and gold no longer looks overbought. 

Updated