Gold is enjoying a modest bounce back after several days of heavy declines. Spot gold has gained over $10 per ounce in mid-morning trade as one report pointed to lower rates for inflation, while another showed an increase and hit its lowest level since last May at around 11 am USDT today!
The University’s Michigan Consumer Sentiment Survey released some good news this morning with their reading putting July’s number above what was expected by markets–which means consumers are feeling more confident about future economic conditions here on our shores – but investors shouldn’t get too excited just yet: we’re still shy 200 points away from reaching all-time highs set months ago…
Other data out this morning was not so great with the Producer Price Index for June rising 0.4%–more than the 0.1% that was anticipated–and this has put a bit of pressure on prices. Still, gold is holding onto its gains and is trading at $1,675 per ounce as of this writing.
Recent declines seen
The gold market has seen some decent declines this past week. After spending several weeks stuck in the $1,700 to $1,800 level, we have finally broken down below that range and into new support at around 1650 USD/kg – which will prove crucial for future price moves given its strength over recent years as nations continue switching away from fiat currencies towards precious metals like these yellowboye bars I’m holding right now! Despite breaking prices down below 1700$, there’s still more downside left if you take a look at all timelines – we could easily head towards 1600$ or lower in the near future as global economic conditions continue to deteriorate.
But things may not be all doom and gloom for gold just yet – some experts are calling this week’s selling a “shakeout” that will ultimately set the stage for another run higher in prices. So, if one is thinking about buying gold, one may want to wait for a bit of stability to return to the market before doing so.
Inflation concerns continue
One of the main drivers of gold prices is inflation – and right now, it remains a major concern for many investors. The Consumer Price Index came in higher than expected this morning, which means that prices for goods and services are rising at a faster rate than what was anticipated. This is just one more piece of data that points to an overall increase in inflationary pressures – and it’s something that gold investors will be closely watching in the days and weeks ahead.
Key technical data
The first test of this key technical level is already in the books, with bulls having won the battle. That could change quickly if bears get things going downstairs fast – the market would essentially collapse when broken below the $1,550 area due lack of support from buyers at current price levels which may lead up to more crashes until metal reaches previous lows seen early last month near $1,520.
The second key technical level for gold is at $1,625 – which was resistance back in early June when prices were the last trading in this vicinity. A break above that level would open up the possibility of a move back towards $1,700 – and beyond.
For now, it remains to be seen which way the market will go – but one thing is for sure: gold remains a volatile and unpredictable asset, and investors should always remain cautious when dealing with this metal.
How will the Fed’s plans impact investors?
The Fed’s plans for next year are a topic of great debate. The central bank has said, multiple times that it believes inflation to be the greatest risk facing America’s economy, and how much further they may be willing to go in order to keep price pressures under control remains an unanswered question altogether at this point. Will they begin to taper asset purchases sooner than expected in order to avoid an inflationary spiral? Or will they keep rates low for longer in an attempt to support the recovery? No one really knows – but one thing is certain: the Fed’s actions (or lack thereof) will have a big impact on gold prices in the months and years ahead.
Threat of Recession
Market players should be aware that the threat of recession may keep markets alert in the coming months and could even help prevent a bear market from taking hold. A worrying economic data point like China’s recent GDP numbers could cause demand for gold assets/media coverage on this precious metal to soar if it is confirmed as being an indicator for wider economic trends – however only time will tell how these events impact risk asset prices going forward!
15 Carrer ‘nix
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Sounder Mirror journalist was involved in the writing and production of this article.