The price of gold soared on Friday to $2474 an ounce, mainly due to a dismal US jobs report, and wider economic uncertainty. Gold’s historic high highlights its role as a haven in economic and geopolitical turmoil.
This dramatic rise was triggered by the US Jobs Report for July. It revealed that the number of new jobs created in the US for the month of July had been significantly lower than expected, at just 114,000. The anticipated increase of 175,000 is much higher.
The unemployment rate has risen to levels last seen in 2021 and the wage growth is slower than expected, which further upsets investors.
Weak job numbers have led to serious concerns regarding the Federal Reserve’s capability to effectively steer the economy.
Recent ISM data have highlighted the contraction of manufacturing, which has intensified concerns.
The market has been dampened by disappointing earnings reports of major corporations.
Geopolitical factors and speculation on Fed rate reductions
In the midst of this economic unrest, there is speculation that Federal Reserve could consider a significant 50 basis-point rate reduction at its September meeting.
The weakening economic indicators have fueled this speculation, as has the growing fear of an extended economic slowdown.
Gold has become a safe investment due to the persistent geopolitical tensions that persist in the Middle East.
Gold prices have risen due to global uncertainty, which highlights its appeal in times of instability.
Gold as a haven of safety
Gold has reached new records due to a combination of bleak job market statistics, possible dovish Federal Reserve moves, and geopolitical risk.
The gold price surge confirms that it is a valuable asset to investors who are looking for stability in the face of economic and political uncertainty.
Gold has historically been a haven of safety during times of financial crisis and political upheaval.
Gold prices rose sharply during 2008’s global financial crisis as investors sought it out for its security.
Gold prices are often driven higher by high inflation or currency depreciation, because it’s seen as an inflation hedge and reliable store of wealth.
Gold prices are typically driven up by geopolitical factors such as wars, conflicts and trade disputes.
Gold prices are also influenced by central bank policies, the supply-demand dynamic, as well as key economic indicators such GDP growth and employment statistics.
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