Yesterday was another bad day for gold as news from Washington led to strength in the US dollar. Looking at our US dollar daily update, the debt ceiling was extended and Trump announced that he will unveil his infrastructure investment program in January. In the past few days, bond yields have been rising (leading to weaker bond prices), as inflation expectations climb. As hopes for tax cuts rise, the US dollar is rallying on higher inflation expectations while gold remains weak. Today's economic environment of accelerating growth and rising inflation expectations is bad for the precious metal. We downgraded our short-term outlook on gold to bearish yesterday. Our medium-term outlook is likely to get downgraded to bearish in the next few weeks.
After its most recent top around $1,299, gold is now below $1,247.
As gold prices fall on US political news, 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.
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.