Gold is back to trading in a narrow range between $1,270 and $1,280. While the precious metal broke out of this range last week, a large number of sellers emerged at higher prices and gold sold off accordingly. Looking at the relative strength in industrial metals such as copper, the divergence between gold and copper has historically resulted in higher inflation. GDP growth and inflation accelerating in tandem is bad news for gold, and one of the reasons we maintain a weak outlook for the precious metal. Looking at technical indicators, gold is trading within normal conditions and is neither overbought nor oversold.
After its most recent top above $1,300, gold is now above $1,276.
As gold prices remain weak thanks to the improving inflation outlook, we are downgrading gold to bearish in the short-term. Gold is neither overbought nor oversold today and continues to trade within normal conditions. This is based on various technical indicators on the daily chart.
As gold continues to trade sideways, we are upgrading the precious metal to neutral in the medium-term. While gold was looking overbought earlier in October, the precious metal is now trading within normal conditions. This is based on technical indicators on a weekly chart.