Gold’s price has been varying within a tight range after U.S. economic data didn’t leave a clear direction for investors to make firm decisions regarding the prospects of the economy. This data comes at a time when the country, and the world, is concerned about the erratic policies on trade coming from President Trump.
Investors are increasingly coming to terms with the possibility that despite pressure from the U.S. president, the Fed rate cuts are likely to take longer to be made due to the uncertainty of economic prospects created by the tariff policies of the U.S. government. This has somewhat dampened the appetite for gold since the precious metal thrives in an environment of low interest rates.
The recent announcement that copper imports into the U.S. would attract a 50% tariff rate added to fears that economic activity would be adversely impacted since copper is needed in various manufacturing activities. The tariffs will increase costs for manufacturers, and some of those costs are likely to be passed on to consumers, which would depress demand and weigh on consumption.
Furthermore, President Trump notified 25 countries about new import tariff rates that would kick in on August 1. Those rates are expected to slow down trading activity and potentially, put the economy into a downspin. It remains to be seen whether the president will delay or change his stance, and the uncertainty surrounding the future of trade relations is causing investors to be cautious about how they should position themselves and their portfolios. This is further contributing to the indecision between gold buyers and sellers.
On Thursday, the Commerce Department released data showing that retail sales had ticked upwards in June by 0.6%, which was unexpected given previous data that showed contraction in consumer spending. This suggests resilience of the economy, but gold traders aren’t sure how long this will last. Robust economic activity pumps the brakes on gold since a thriving economy makes investors increase their appetite for more risky but rewarding asset classes, such as stocks.
Last week, people making claims for unemployment benefits also decreased to 221,000, a sign that job losses were reducing. Higher numbers boost interest in safe haven gold, and these falling figures have the opposite effect.
Traders are now watching for the upcoming data on consumer sentiment, which could provide a clearer direction on the prospects for gold.
Given that gold remains above $3,300 an ounce, the metal is bullish overall and the current sideways movement of the price is unlikely to cause significant concern to entities like GEMXX Corp. (OTC: GEMZ) that are engaged in gold mining and processing into consumer goods, such as jewelry.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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