from Birch Gold Group:
Key Takeaways
- Gold prices remain at near-record levels, trading at $2,450, despite some skepticism earlier in the year
- Recently, disappointing economic reports have strengthened gold’s position as a safe-haven asset
- Ongoing geopolitical tensions in the Middle East and Asia continue to bolster gold’s appeal
- Recession signals have heightened expectations of near-term interest rate cuts, supporting gold prices further
- China’s previously unreported gold purchases highlight the growing demand for the precious metal worldwide
TRUTH LIVES on at https://sgtreport.tv/
This week, Your News to Know rounds up the latest top stories involving precious metals and the overall economy. Stories include: Recessionary fears renew as sentiment shifts in favor of gold, is the world ill-prepared for a consumer-driven supply glut, and guess who’s been fudging the news about their gold purchases?
Dovish Fed, recession signals and a uniformly gold-bullish sentiment
Weird as it might be to say that gold hasn’t enjoyed universally favorable sentiment, we have actually seen plenty of bearish headlines so far this year despite the historic price action. Survey data shows that investors, both professional and private, couldn’t seem to agree on gold’s direction.
But several things that happened in the past week look to be changing that. For starters, we didn’t see much of a drop from what is for all intents and purposes an all-time high gold price. As of this morning, gold traded at $2,450.
What’s keeping gold elevated besides fundamentals?
A big point has been a string of disappointing reports, including U.S. jobs, non-farm payrolls and wage inflation. You could say there hasn’t been any good economic news (unless you’re a gold investor).
Risk-on assets took a beating in the wake of all this while the U.S. dollar fell to a 4.5 month low in what has been a sell-off and a flight to safe haven assets, which are few and far between these days.
Not that it was ever irrelevant, but the conflict in the Middle East is actually becoming more supportive of gold as time passes by. The Russian invasion of Ukraine had its biggest impact in the first week or two, as seen in gold’s price action. It slowly withdrew from the public eye, so to speak, as the months went by. Part of this had to do with a re-establishing of supply lines. But the BRICS alliance, in a strange sense, supported Russia. They have to keep up some appearances for the BRICS thing to work, right?
Nearly a year into the Gaza conflict, things only seem to be getting worse. Discussion of imminent U.S. troop involvement is happening at the highest levels, the arms sales have topped records – and that’s just the start. People don’t know what to expect, and the more this goes on and especially if it worsens, the more gold will rise.
The biggest story in the U.S. is now unquestionably the recessionary signals we’re seeing – higher unemployment, fewer job openings and less consumer spending. And when we talk recession, we must talk about the Fed and the rate cuts we’ve been trained to expect during economic slowdowns.
For the last three or four years, investors have treated bad economic news as good news! Bad economic news means the Fed will be forced to slash interest rates, boosting speculative asset prices. Suddenly, almost overnight, investors and analysts realized that bad economic news is bad news. And they’ve acted accordingly.
Not only is inflation nowhere near 2%, but as we’ve just mentioned, wage growth simply isn’t keeping up. That means an effective pay cut for American families as grocery, fuel and housing prices rise faster than their income. Month after month, year after year… Understandably, nobody who’s watched their paychecks buy less and less wants this wealth destruction to accelerate.
