Gold prices are currently recovering after falling sharply yesterday. Thanks to a rebound in the S&P 500 (which ended the day up 1.74%), US Treasury yields resumed strengthening while the dollar gave up some of its gains. While gold prices tend to rise when the dollar weakens, rising bond yields led to a sharp sell-off in the precious metal yesterday. Recall that gold trades inversely to real interest rates over the long term. Today, fear is re-appearing as Asian stock markets underperform the US. Hong Kong's Hang Seng Index is currently down while Japan's Nikkei 225 is only up slightly. As bond yields fall, gold prices are rising. Later today, we will downgrade our short-term outlook on gold to neutral as the precious metal runs out of momentum. Our medium-term outlook remains bullish.
After its most recent bottom around $1,240, gold is now above $1,331.
As gold runs out of steam, we are downgrading gold to neutral 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, 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.