Gold prices are flat today, as weakness in the US dollar is offset by rising nominal interest rates. Looking at the dollar, the currency is weaker against most major peers including the euro and the Japanese yen. Turning to bonds, US Treasury yields are mostly higher today. 10-year Treasury yields are currently trading at 2.905%. While recent wage growth figures were lower than expected, interest rates continue to edge higher. Later this week, we'll see US inflation data for February. As we have written before, we expect headline inflation to fall in the future, leading to lower interest rates and (all else held equal) higher gold prices. As the precious metal trades inversely to real rates, gold tends to strengthen when inflation is decelerating. Our short-term outlook on gold is neutral, while our medium-term outlook remains bullish.
After its most recent top around $1,340, gold is now above $1,321.
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.