Gold prices are flat this morning after rising above $1,326 yesterday. As we wrote in our US dollar daily update earlier today, the US dollar experienced a big sell-off yesterday. The currency fell after major media outlets reported that China was set to curtail purchases of US treasury bonds in the future. Gold, fulfilling its role as a monetary alarm signal, rose as a result. This morning, the Chinese authorities have denied the report, and the dollar has strengthened. Looking at a chart of gold prices in recent days, the precious metal continues to hover around the $1,320 level. For gold to move meaningfully higher, both inflation expectations and the US dollar will have to weaken from present levels. We believe this is fairly likely over the longer term. Our short-term and medium-term outlook on gold remains bullish.
After its most recent bottom around $1,240, gold is now above $1,316.
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.