Gold prices are sharply higher today thanks to both weakness in the US dollar and rising US Treasury yields. While today's consumer price index figures beat expectations (2.1% vs. 1.9% expected), the US dollar sold off nonetheless. While year-over-year CPI numbers were high, monthly gains in core consumer expenditures were fairly weak. As gold trades inversely to the US dollar and real interest rates, the precious metal is strengthening as a result. As we wrote in a recent commentary, we expect gold prices to remain in a bullish trend for the foreseeable future. As we expect both the dollar and inflation to remain weak, this is a fairly supportive environment for the precious metal. 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 $1,346.
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.