Gold prices are higher today as the US dollar resumes weakening. Thanks to a rebound in key global stock markets, risk appetite is returning. As the fear of a stock market rout recedes, the US dollar is selling off on lower safe haven demand. Looking at bond yields. US Treasury yields continue to march higher. 2-year, 10-year and 30-year yields are all rising this morning as inflation expectations rise. As gold trades inversely to real interest rates, the precious metal tends to sell off when nominal yields rise. Today, gold is strengthening in spite of higher nominal yields, suggesting that inflation expectations are rising as quickly as bond yields. Our short-term outlook on gold remains neutral, while our medium-term outlook remains bullish.
After its most recent bottom around $1,240, gold is now above $1,323.
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.