Gold prices increased to $2,645 an ounce this Monday morning from $2,620 at the beginning of last week. The higher gold prices resulted from further economic inflation and employment reports that aligned with the Federal Reserve's expectations of further interest rate cuts after the 50-basis point cut two weeks ago.

Gold's status as the preferred reserve asset held by Central Banks worldwide is escalating. According to Bank of America, gold recently surpassed the euro to become the second-largest reserve asset after the U.S. dollar. 

The significant shift from the dollar to gold for central bank reserves, gaining momentum over the past two years, is a crucial development in the global economic landscape. The sanctions on Russia have heightened other countries' concerns about the potential freezing of their U.S. dollar reserves when NATO or G-7 countries disagree with a country's actions, further fueling this trend. 

Earlier this month, Russia announced it would increase its daily gold purchases from $13.5 million to $93 million (1.2 billion rubles to 8.2 billion rubles) using windfall oil and gas revenue. While the Dollar index has held above 100 in the past 12 months, the Fed's recent move to decrease interest rates has brought it back to 100. Gold performs even better against a weaker dollar. If the Federal Reserve follows through on its prediction to lower interest rates another 50 to 75 basis points before the end of the year, the dollar index would likely fall even further.

Russia is hosting a BRICs Summit in Kazan, Russia, from October 22nd to 24th. This summit, which brings together the leaders of Brazil, Russia, India, China, and South Africa, is significant as it will discuss 'BRICS Pay' - an alternative to the U.S. dollar. This could potentially shift the global economic landscape. We are hosting a webinar this week called 'BRICS and De-Dollarization'. 

Question of The Week:

When do employment numbers affect the price of gold? 

Answer: While it's not a direct relationship, job statistics play a crucial role in influencing the price of gold. They are essential to the Federal Reserve in formulating monetary policy. One of the Fed's mandates is to achieve a maximum employment rate, and interest rate decreases favor higher gold prices. Historically, these decreases have also helped employers access capital resources more efficiently, potentially boosting employment.