Overview of Gold Prices in Response to Economic Struggles
Golden Glance: Gold Prices Continue to React to Economic Struggle
May 28, 2024
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Current Economic Factors Influencing Gold Prices
On Friday, before Memorial Day weekend, the Initial Jobless Claim was slightly lower than expected, and the Consumer Sentiment report was better than expected. These data points factored into the gold spot price dipping below $2,350 an ounce.
Today, the U.S. Consumer Confidence Index report rebounded for May after a three-month decline. However, the Consumer Expectations Index score of 74.6, a forward-looking indicator, still fell short of the 80 thresholds, typically signaling an impending recession. Purchasing plans for homes remained stagnant in May, reaching their lowest level since August 2012.
Gold prices have been on a bullish trajectory in the current inflationary environment, not just in the United States but globally. The increase in prices and depreciation of fiat currencies have contributed to this trend. Central banks worldwide have been consistent net buyers of gold since 2010. They have accumulated over 7,800 metric tons of gold, with more than a quarter of that purchased in the last two years.
Insight into Market Movements
The potential market-moving events for the week of May 27th, 2024, include reports around the Personal Consumption Expenditure Price Index (PCE) and Core PCE (excluding food and energy). The Federal Reserve governing body (FOMC) considers the Core PCE a good measure of underlying inflation. Reports regarding persistent high inflation make the possibility of interest rate cuts in 2024 less likely.
According to the World Gold Council, central banks have been consistent net buyers of gold on an annual basis since 2010, accumulating over 7,800 metric tons over that time, with more than a quarter of that purchased in the last two years.
