Recent developments in investment gold trades in the commodity market have shown, in light of current economic data such as the state of US inflation along with data on the state of the US labor market, that further increases in US interest rates by the Federal Reserve System (FED ) is not entirely certain. Investors have therefore suspended their opinion for the time being on the strong belief that there will be further increases in bank rates. This opinion was strongly supported by the speech of the head of the FED, Mr. Jerome Powell, which he delivered last Friday, August 25, 2023, at the traditional economic symposium in Jackson Hole.
However, according to economic correspondents, this speech by the chairman of the Federal Reserve System (FED-Federal Reserve System), Mr. Jerome Powell, as the head of the US central bank, was made even before the publication of these macroeconomic data, which showed that the United States economy does not show any strong negative phenomena and even though the reported data in some indicators indicate values in decline and inflation in a slight increase, so they do not signal any acute potential problem that would significantly worsen the state of the economy of the United States of America if the current level of interest rates in the United States is maintained. The price of investment gold is very sensitive to the exchange value of the US dollar (USD), as the main world currency of commodity markets, and with high interest rates, the exchange value of USD increases, which makes gold less attractive and its price falls. Holding gold as a direct investment instrument does not bring any return and its ability to maintain financial value or bring potential profit to its investors is only by increasing its price on the commodity market.
This week, which is marked as the 35th in the calendar for the year 2023, brought commodity markets and especially gold shops a whole series of macro economic data that influenced the price development of investment gold, precisely with regard to further possible developments regarding interest rates rates in the US. One of these important and even key data was the state of inflation in the USA, which in August of this year 2023 increased by + 0.2% of its previous volume compared to the previous month, reaching a value of 3.2% year-on-year. Other data from the Personal Consumption Expenditure (PCE) price index rose 0.2% last month, matching June’s gain. However, the key figure will be the state of the US labor market, which, according to preliminary estimates, saw a decline in non-farm payrolls in August. The United States leadership administration, through the Department of Labor, will publish this data today during the European afternoon of Friday, September 1, 2023. Estimates put the number of new jobs at around 170,000, but predictions were set for a volume of at least 200,000 new jobs.
These already published data and predictions regarding the state of the labor market in the US have thus prompted analysts and especially financial strategists of investment banks and brokerage companies to suggest that the central bankers of the US will postpone raising interest rates as part of the FOMC FED (Federal Open Market Committee Federal Reserve System) meeting. In view of this situation, investment gold was then traded during the European morning of Friday 1/9/2023, at approximately 4:52 CET on the commodity market COMEX (Commodities Exchange Centre) at a value of USD 1.96680 per troy ounce with a daily increase of +0.05% of its previous price. This price of gold was reached in a situation where the exchange value of the USD maintained a technical increase of 0.01% of the point value according to the dollar index DXY (US Dollar Currency Index), which compares the value of the USD with the other six major world currencies. Thus, on the indicated day and time, the DXY index value was 103.64 USD points and the global currency pair of the single European currency Euro (EUR) and the US dollar showed a mutual exchange rate of 1.084 USD per EUR with the daily strengthening of the EUR by + 0.01% exchange rate against USD.