A window to buy has been prised open as we end the week thanks to a rebound in Treasury yields and the U.S. dollar index.
This has been a topsy-turvy week with one of the main talking points coming from the credit rating agency, Fitch which downgraded the U.S. government’s credit rating from AAA to AA+. This comes as a result of political wranglings over the debt ceiling and predicted fiscal deterioration between now and 2026.
One of the other big three credit reference agencies, Standard & Poor’s had already moved to strip the government of its AAA rating.
Despite this surprise move – which could have longer term ramifications for the American economy and policymakers – Treasury yields have continued to quietly increase. This pattern, which has seen yields rising since March has hemmed in the bulls. Coupled with a recovering U.S. dollar index, gold prices have been stifled, creating a good window to buy for those prepared to move quickly.
Gold was trading around £1,520 ($1,935) yesterday (Thursday) – however you’ll need to act quickly as new jobs data is due to be issued today. As we have seen previously, economists are not always on the mark when it comes to predicting job increases or losses.
Projections indicate that the non-farm payroll report will show a total of 200,000 new jobs created. That figure is lower than the 209,000 new roles recorded for June. If that number is correct, it will also be the smallest number of new jobs created in a single month since December 2020 – something which could indicate a tightening in the job market and slowing of the economy, foreshadowing a recession. Should that be the case, it’s likely that we’ll see gold prices ignite once again.
