According to Kitco, last Friday, the US Bureau of Labor Statistics said that 254,000 jobs were created in September. This was the strongest jobs report in six months. The unemployment rate fell to 4.1%.
The dollar immediately surged. Markets, which had been betting on a slowing economy, had to adjust quickly. According to the CME FedWatch Tool, markets had previously priced in a 30% chance of the Federal Reserve cutting interest rates by 50 basis points in November. But after the US jobs report, those expectations immediately fell below 1%.
Gold has seen some profit-taking pressure, but the decline has been modest. In addition, the precious metal has received many positive forecasts, or at least flat, this week.
There are many reasons why gold is indifferent to the pressure from US economic data. A series of factors such as escalating geopolitical tensions in some regions of the world, adjustments in interest rate management in many countries, scarce supply due to lack of new gold mines, economic recession... make it difficult for gold prices to fall sharply.
Last Tuesday, Iran launched a ballistic missile at Israel, and the gold market quickly heated up. Better-than-expected US economic data over the weekend was a welcome relief, but the heat still simmered. Now, the uncertainty has been compounded by the fact that Israel has begun a ground operation in Lebanon.
Besides, gold can be mentioned as a sustainable investment channel, a safe haven for cash flow whenever there is geopolitical volatility or economic recession, inflation...
According to Investopedia, gold has been considered a means of investment and exchange for thousands of years, before people turned to high-value paper money and stocks for investment. Through many fluctuations, gold has always been a valuable exchange. For this reason, countries are always in a state of maintaining gold reserves, to serve the economy and politics.
In the mid-1900s, most countries abandoned the gold standard (where a country's currency was valued in terms of a certain amount of gold) due to a number of limitations. In 1999, Switzerland became the last country to completely abandon the standard. However, countries still rushed to hoard gold bullion.
For businesses, gold is a commodity asset used in medicine, jewelry and electronics. For many investors, both institutional and retail, gold is a hedge against inflation or recession. Although the gold standard is no longer in place, there are still many reasons for central banks to rush to stockpile bullion.
This is because gold acts as a hedge against inflation, helping to boost confidence in a country's economy. Starting in 2022, as the world economy and politics fluctuate, central banks quickly bought gold.
A recent survey by the World Gold Council (WGC) found that global central banks, especially those in emerging markets and Asia, continue to view gold as an important source of their reserves and indicate their intention to continue increasing their long-term allocation to gold.
According to WGC data, in the second quarter of 2024, total global gold demand increased by 4% year-on-year to 1,258 tons. Total gold demand increased due to vibrant over-the-counter (OTC) transactions, increasing by 53% to 329 tons year-on-year. Central bank gold demand totaled 183 tons in the second quarter of 2024, down 39% from the first quarter, but still up 6% from the same period in 2023. Gold purchases in the first half of the year reached 483 tons, up 5% from the record 460 tons recorded in the first 6 months of 2023.
