Gold prices are currently slightly lower. Yesterday, the precious metal ended the day flat despite an increase in the US dollar index (a measure of the currency against its major peers) and rising yields. Given the current backdrop of accelerating inflation coupled with strong US growth, we contend that further losses for the precious metal lie in store. Our commentary on gold published yesterday explains our argument in greater depth. The most important takeaway for gold traders is to watch economic developments as they relate to the dollar and rate hike expectations.
Looking at gold today, the precious metal remains weak. As both the US dollar index and US Treasury bond yields are hovering above overbought territory, gold may enjoy some temporary relief. In the longer-term, both the dollar and yields can keep rising thanks to prevailing economic conditions. Our short-term and medium-term outlook on gold remains bearish.
After its most recent top around $1,320, gold is now above $1,287.
As gold prices give up recent gains, 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.