Gold continues to strengthen today, again thanks to ongoing weakness in the US dollar. The US dollar continues to crater, and is at fresh three-year lows today. The latest selloff in the US dollar was driven by Treasury Secretary Mnuchin's comments at the World Economic Forum in Davos, Switzerland. Specifically, he stated that a weak dollar was supportive for trade. Beyond Mnuchin's comments, the overall trend for the US dollar remains weak thanks to strong growth outside the United States. This is the main reason we believe that gold prices can keep strengthening. Looking at technical indicators, gold continues to look overbought on a daily chart. While the precious metal is poised to keep strengthening, gold looks due for a short-term correction. Our short-term and medium-term trending indicators suggest that gold remains in a bullish trend.
After its most recent bottom around $1,240, gold is now above $1,361.
As gold prices gain, we are upgrading gold to bullish in the short-term. Note that gold is now looking overbought. This is based on various technical indicators on the daily chart.
Following recent strength in gold, 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.