Gold inter-markets: bearish trend remains intact, sell on rallies

Following Donald Trump's surprise victory in the US presidential election, Gold lost over 10% from monthly highs and plunged below $1200 psychological mark. The metal subsequently dropped to $1170 on Friday, level not seen since Feb. 8 before staging a minor recovery to currently trade around $1188-89 region. 

Growing expectations that the Federal Reserve will certainly raise interest rates at its December meeting, which was further reaffirmed by the Fed November meeting minutes, has been the key factor driving the overall US Dollar Index to the highest level since April 2003 and is weighing on dollar-denominated commodities - like gold. 

Moreover, aggressive fiscal stimulus hopes from Trump administration has been driving the US longer-term (30-year) Treasury bond yields, resulting into a sharp decline for the non-yielding precious metal.

Adding to this, a strong rally in the US equity markets, with most major US equity indices flirting with record high levels, has been driving flows away from the yellow metal. Meanwhile, the Volatility Index (VIX) has also remained at suppressed levels for quite some time now and has further failed to provide any support to the metal's safe-haven appeal.

On Friday, however, a mild greenback retracement, as depicted by a corrective slide in the USD/JPY major, coupled with a slide in the US Treasury bond yields, provided much needed respite and helped the metal's recovery from multi-month lows. 

However, markets have started speculating of a further Fed rate-hike moves in 2017 and if the incoming US economic data reinforces market expectations, it is likely to open room for continuation of the metal's strong bearish trend in short to medium-term. Hence, it would be prudent to conclude that any technical bounce could turn out to be an opportunity to initiate positional bearish positions.

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