Gold prices are currently slightly lower. Yesterday, the precious metal sold off again after the European Central Bank failed to meet expectations for tighter forward guidance. As a result, the euro weakened (pushing the US dollar higher in relative terms). As the US dollar strengthened, gold sold off in response.
In a recent commentary on gold, we warned that the outlook for the precious metal is worsening thanks to the likelihood of future dollar strength. As the dollar is starting to look overbought, gold is likely to enjoy a temporary relief rally. Once the dollar resumes strengthening, expect gold prices to head lower in the longer term. Turning to bond yields, while US Treasury bond yields have fallen in the last two days, the medium-term trend remains bullish. As crude oil prices continue to make gains, we expect bond yields to continue moving higher this quarter. Following the recent sell-off, we will downgrade our medium-term outlook on gold to neutral, and our short-term outlook to bearish.
After its most recent top around $1,353, gold is now above $1,316.
As gold prices weaken, we are now bearish on gold 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.
As gold runs out of steam, we are now neutral on the precious metal in the medium-term. The precious metal is trading within normal conditions. This is based on technical indicators on a weekly chart.