After rising sharply yesterday, gold is moving down today. Given the precious metal's sensitivity to real rates, gold prices are benefiting from the Federal Reserve's doubts regarding future inflation. As per the FOMC's minutes, while a December rate hike looks likely, there are doubts about inflation in 2018 and beyond. As the odds of future rate hikes decrease, gold is strengthening thanks to lower real rates. Our view remains that doubts regarding the US Senate tax bill will ultimately lead to some support for gold in the short term.
After its most recent top above $1,300, gold is now above $1,288.
As gold prices rise thanks to weak inflation expectations, we are upgrading gold to bullish 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.
Following a recent selloff in gold above $1,280, we are downgrading 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.