Gold prices rose sharply yesterday, as both inflation figures (CPI) and the Fed's outlook suggested a more gradual pace of rate hikes. Bond yields also fell sharply yesterday as rate hike fears dissipated. Looking at the outlook for inflation, commodity prices have been flat or falling since early November. As such, future inflation numbers are likely to be weaker, helping gold prices. Now that the risk of a hawkish Fed statement or strong CPI numbers has passed, gold bulls are more likely to emerge from hiding. Despite recent strength, our trending indicators for both the short-term and the long-term suggest a bearish outlook.
After its most recent top around $1,299, gold is now below $1,254.
Following recent weakness in gold, we are downgrading the precious metal to bearish in the medium-term. The precious metal is trading within normal conditions. This is based on technical indicators on a weekly chart.