Will Data Call the Fed’s Bluff?

This week could be an important one for the gold market, as recent hawkish commentary from the Fed has driven a shift in sentiment. Investors will get the opportunity to see for themselves, however, as the latest Fed meeting minutes will be released and as the key jobs data from June is released at the end of the week.

In recent trade, gold has not been able to get much going to the upside, as the hawkish tone from the central bank and stronger equities have weighed on appetite. That could change, however, and in a hurry.

The Fed minutes could provide some significant clues as to the central bank’s thought process at this point, and any underlying dovishness could potentially cause a reversal in gold.

Friday’s non-farm payrolls report for June could potentially be a game changer. Consensus estimates are looking for 170,000 jobs created with the unemployment rate steady at 4.3 percent. Any significant miss, however, could cause the Fed to rethink its plans about another rate hike this year.

Although the Fed recently reiterated its plans for further tightening this year, there has been some increasing skepticism. Some weakness in key pieces of economic data would likely add fuel to the fire, and the Fed could find itself questioning the pace of further hikes.

Economic weakness could cause investors to take a more unrealistic opinion of projected rate hikes, and rates could potentially remain at very low levels for some time to come.

You have to also question the central bank’s willingness to tighten further in spite of numerous geopolitical issues. North Korea recently tested an ICBM in a defiant move that could warrant a tougher U.S. response. President Trump has made it clear that recent actions from the North will not be tolerated, and an escalation of the conflict could be at hand.

Any type of military action with the North could have far-reaching effects on global markets, and gold could potentially see fresh safe haven inflows. Such a scenario could also act as the straw that broke the camel’s back for the bull market in equities, and the Fed may be reluctant to hike in the midst of declining equity markets.

Added to these factors is an increasing likelihood of recession, and it is difficult to imagine the Fed rocking the boat to much too fast.

The current economic and geopolitical scenario could potentially be bullish for gold, and now may be the ideal time to be buying.

If you don’t already own an allocation in physical gold, now may be the time to act before a potentially significant upside breakout in prices.

Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our associates are here to answer your questions, and can even show you how to buy and hold this key asset class using your IRA account.

Don’t wait for the next major market meltdown or for the next recession to strike first. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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