Two sets of data supportive of gold have emerged as the week winds up, giving the gold bulls a price boost heading into the weekend.
The first supportive piece of data came in the form of a tamer than expected consumer price index report. The 3.2% year-on-year reading was slightly better than the 3.3% increase that analysts had forecast to be on the cards.
A second piece of data, in the form of higher unemployment claims than predicted also lent some support to gold prices. The number of people filing initial claims surged by 21,000 individuals, taking the total amount of weekly jobless claims to 248,000. Economists had expected to see 230,000 claims.
While neither report was remarkable on its own, together they are more powerful than the sum of their parts. That’s because both data points indicate that the economy is slowing and jobs tightening, with inflation continuing to ease. This scenario adds further weight to calls for the Federal Reserve’s rate hikes program to be shuttered. There are already indications that this could be the case, with experts suspecting that July’s base points increase would be the last of the summer.
If you caught our mid-week update on Wednesday, you’ll already know that some Federal Reserve presidents appear to be on board with pausing rate increases to ensure a soft landing. Patrick Harker, the President of the Philadelphia Federal Reserve appeared to signal that he was in favour of an end to the tightening cycle, telling a business gathering earlier this week that, “Absent any alarming new data between now and mid-September, I believe we may be at the point where we can be patient and hold rates steady and let the monetary policy actions we have taken do their work.”
Gold prices were trading around £1,536 ($1,952) in the wake of the data reveal. But should the Feds confirm no more rate hikes are on the cards, you can expect this level to be quickly surpassed. Don’t wait for that to happen.
