After weakening yesterday and earlier this morning, gold prices are currently flat. Looking at bond yields, US 10-year and 30-year yields rose sharply yesterday and earlier this morning. Yields are currently pulling back, lending support to gold prices. Given gold's sensitivity to real interest rates, higher nominal yields typically results in lower gold prices. Looking at recent moves across asset classes, markets seem to pricing in higher inflation. Surging crude oil prices and stocks coupled with weakness in gold and bonds is typically a sign of rising inflation and growth. We last saw these conditions following the victory of Donald Trump in the elections. While we forecasted these conditions earlier in the year, today the outlook for inflation is more doubtful as crude oil prices are at a bullish extreme based on speculator data. Wage growth is also fairly limited. Despite recent weakness in gold, our view is that decelerating inflation in the future should keep gold prices supported. Our short-term and medium-term outlook on gold is currently bullish.
After its most recent bottom around $1,240, gold is now above $1,314.
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.