Gold fell sharply yesterday but is slightly higher this morning. Gold is falling even as nominal interest rates are heading down, suggesting a weaker outlook for inflation. Given the upcoming Friday deadline to extend the US government debt ceiling and doubts regarding the House/Senate tax bill reconciliation process, markets are hesitant to bet on rising inflation. On the other hand, falling nominal rates are a positive factor for gold prices. Without any change in inflation expectations, gold prices typically rise as nominal interest rates fall. Looking at technical indicators, we will downgrade our short-term outlook on gold to bearish later today after several trading sessions of weakness. Our medium-term outlook remains neutral.
After its most recent top around $1,299, gold is now below $1,269.
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.