Gold prices are trading lower today, despite recent strength in the US dollar. Looking at interest rates, US Treasury yields are universally higher as fears of accelerating inflation result in higher yields. 2-year US Treasuries are currently yielding 2.278%, while 10-year Treasuries are yielding 2.881%. Later today, we'll see the consumer price index for February. The consensus estimate calls for year-over-year inflation to accelerate to 2.2% (from 2.1% in January). The fear is that the Federal Reserve will hike rates more than three times, assuming inflation continues to march higher. As we have written before, we expect inflation to decelerate in the coming months thanks to base effects (YoY inflation was high at this point last year) and falling commodity prices. For now, traders are not taking any chances and gold is selling off accordingly. 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 $1,319.
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.