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Gold Price Rises Marginally Amid Economic Shifts

Gold Price Rises Marginally Amid Economic Shifts

July 08, 2024768 view(s)

Gold prices are at $2,365 an ounce this Monday morning, slightly increasing from $2,339 an ounce last Monday. Last week, the unemployment rate increased slightly to 4.1 percent. Jerome Powell said, "The U.S. economy has 4% unemployment, growing at 2%, and inflation is at 2.6%. Let's keep that going. Let's do our jobs. History will judge." 

Last week's employment report also showed that average hourly earnings rose 3.9% in June compared to the previous year, marking the smallest gain since 2021. This data is bullish for gold prices as it is another sign that lower interest rates may come sooner rather than later. Gold is up this week even as Bloomberg reported over the weekend that China did not make a net purchase of gold for two consecutive months. 
 

Gold Prices React to Economic Indicators Amid Fed Speculation

 

This week's potential market-moving events include the following: 
- Consumer Credit Report (Monday)
- Fed Chairman Powell's Senate Testimony (Tuesday)
- Fed Chairman Powell Congress Testimony (Wednesday)
- Consumer Price Index (Thursday)
- Producer Price Index (Friday)

 

The gold market this week should continue reacting favorably, as barriers to lower interest rates from the Federal Reserve could come as soon as September. Inflation is trending down while unemployment is increasing. Will the Consumer Price Index (CPI) and Producer Price Index (PPI) on Thursday and Friday continue to tell a story of decreasing inflation? If so, it adds more compelling evidence for the Federal Reserve to make interest rate cuts as the U.S. shows signs of a slowing job market. 

 

It's important to note that historically, as interest rates have decreased, gold prices have risen. This inverse correlation between Treasury bond's interest rate yields and the price of precious metals like gold is a key factor in understanding the market. 

 

The Federal Reserve's dual mandate is to achieve maximum employment and stabilize prices. It does this by controlling the money supply and raising or lowering interest rates when the economy is slowing down or growing too fast. You can watch several hours of C-Span this week to try and glean Jerome Powell's mindset when he speaks to Washington or bookmark our website to get the full scoop on the gold market every Monday. 

 

We would also like to extend a special invitation to you to join our next live webinar at the U.S. Gold Bureau. This is a great opportunity to delve deeper into topics relevant to the industry and be part of the ongoing discussion. Register here: https://secure.usgoldbureau.com/events/

 

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