After rising yesterday, gold prices continue to strengthen this morning. Despite ongoing political tensions in Catalonia, the US dollar remains fairly weak as markets doubt the outlook for future inflation. Today's Core PCE figures are likely to be strong, as November inflation figures have benefited from stronger commodity prices since last summer. Going forward, future inflation data is likely to be weaker after the commodity bull market paused in early November. Historically, the Federal Reserve has hesitated to raise rates in an environment of decelerating inflation. We will upgrade our short-term outlook on gold to neutral later today given recent strength. We also expect to upgrade our medium-term outlook shortly.
After its most recent bottom around $1,240, gold is now above $1,268.
As gold prices gain on the weak inflation outlook, we are upgrading gold to neutral 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 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.