Gold prices fell sharply yesterday and continue to sell off this morning. Today is an important day for gold given upcoming Core PCE data. If the Fed's preferred measure of inflation continues to strengthen, expectations for future rate hikes will increase. Given strong economic growth, the Fed will have few excuses not to raise rates in an environment of rising inflation. Given gold's sensitivity to real interest rates, this would be negative for the precious metal. The other risk for gold is the potential of the Senate tax bill getting through Congress. The Senate debate begins later today, and a full vote on the bill is likely tomorrow.
After its most recent top around $1,299, gold is now below $1,282.
As gold prices rise above $1,290, 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 weakness in gold, we are downgrading the precious metal to neutral in the medium-term. The precious metal is trading within normal conditions. This is based on technical indicators on a weekly chart.