Gold prices are currently flat. Yesterday, the precious metal strengthened as both the US dollar and US Treasury yields fell. While gold traded as high as $1,318/ounce at one point in the day, the precious metal ended the day closer to $1,312. Looking at 10-year US Treasuries, yields fell to 2.93% at one point yesterday, but ended the day closer to 2.95%. As gold trades inversely to real interest rates, the precious metal moved lower alongside rising bond yields.
Looking at gold today, the precious metal is flat while the dollar is slightly higher. Most US Treasury yields are unchanged from yesterday. As the US dollar continues to look overbought, we expect the dollar to remain weak. While this is good news for gold in the short-term, the longer term picture for gold remains concerning. As we wrote in our US dollar daily update, the current economic environment of accelerating growth and inflation raises the risk of the Federal Reserve continuing to raise rates. This is the worst-case scenario for gold, and we expect the precious metal to remain this weak this quarter as a result. Our short-term and medium-term outlook on gold is bearish.
After its most recent bottom around $1,303, gold is now above $1,311.
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 weakens, we are now bearish 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.