Analysts believe that gold prices may soon surpass $2,500/oz due to the risk of a U.S. economic recession, which could prompt the Federal Reserve (Fed) to cut interest rates more aggressively than expected.
Gold prices fell on Friday (August 2) as investors took profits after a significant increase in the precious metal’s price during the trading session. Analysts predict that gold prices could soon exceed $2,500/oz because the potential for a U.S. economic recession might lead the Fed to implement larger-than-expected interest rate cuts.
The latest statistics show that the U.S. job market slowed more than expected, with the unemployment rate rising to its highest level since October 2021. The U.S. Department of Labor’s non-farm payroll report showed 179,000 new jobs in the month, compared to the 185,000 new jobs forecasted by economists in a Dow Jones survey. The unemployment rate increased to 4.3% from 4.1%.
This report caused U.S. Treasury bond prices to surge, while the USD exchange rate plummeted, providing support for gold prices and helping the precious metal avoid a sharp decline due to profit-taking pressure.
As bond prices rose, the yield on the 10-year U.S. Treasury bond fell to its lowest level since last December as investors flocked to buy bonds for safety. They are concerned that the Fed may have made a mistake by not cutting interest rates at this week’s monetary policy meeting.
Additionally, the USD depreciated significantly, with the Dollar Index dropping 1.15% to close the week at 103.22 points. This is the lowest level for the index since March. Over the week, the Dollar Index fell by 1.05%.
With the bleak jobs report just released, many experts believe that the Fed may have to cut interest rates by 0.5 percentage points at the September meeting, instead of the previously expected 0.25 percentage points.
https://bitforum.net – Crypto forum discussions about all aspects of cryptocurrency bitforum socialfi #InnovationSocialNetwork
