Gold prices are currently slightly weaker. Yesterday, gold prices weakened during European trading hours as weak data from the Eurozone pushed up the US dollar in relative terms. The precious metal made back most of its losses during US trading hours later in the day. While gold weakened earlier today, the precious metal found support in the region just above $1,310 earlier today. Gold has been mostly trading as a function of the dollar in recent history as US Treasury bonds have been trading in a fairly narrow range. 10-year US Treasuries are currently yielding 2.954%.
As the dollar continues to look overbought, we believe more relief is in store for gold in the short-term. One risk to this outlook is the upcoming Trump Iran decision at 2PM EST later today. For reasons we explained in our US dollar daily update, significant weakness in crude oil may push up the dollar. In the longer-term, gold prices are at risk thanks to rising US inflation. An acceleration in crude oil prices this year coupled with weak comparable inflation figures at this time last year is likely to push up future inflation rates. As both US growth and inflation accelerate simultaneously, the outlook for gold is fairly bleak. Our short-term and medium-term outlook on gold is bearish.
After its most recent bottom around $1,303, gold is now above $1,313.
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.