After ending the day higher yesterday, gold prices are falling this morning. Looking at bond yields, 10-year US government yields are higher this morning, hurting gold prices. Given gold's sensitivity to real interest rates, higher bond yields tend to cause gold prices to fall. The precious metal has run out of steam after strengthening to $1,320+ and is currently consolidating its gains. While gold was looking overbought recently, this is no longer the case today. In the short-term, we expect the ongoing correction to continue after the precious metal's breathless rally starting in mid-December. In the longer term, weak inflation and limited US dollar strength should keep gold on a strengthening path. Our short-term outlook on gold remains bullish. We recently upgraded our medium-term outlook on gold to bullish following its latest rally.
After its most recent bottom around $1,240, gold is now above $1,317.
As gold prices gain on US dollar weakness, we are upgrading gold to bullish in the short-term. Note that gold is now trading within a normal range. This is based on various technical indicators on the daily chart.
Following recent strength in gold and weakness in the dollar, we are upgrading the precious metal to bullish in the medium-term. The precious metal is trading within normal conditions. This is based on technical indicators on a weekly chart.