Gold struggles as US posts strong economic data

By Ruchir | Date: 07/03/2323

New Delhi, India -- Invest in gold? If so, chances are you’ve seen you’ve been watching the prices of the precious metal avidly over the past month as price drop steeply from their dizzying January highs.

As is often the case, the culprit has been the US dollar, but how is the dollar affecting the price of gold? Why do gold and the dollar have such a close relationship, and what’s our gold price prediction for 2023 – will it continue dropping or is there light at the end of the tunnel? Read on to learn more and become an aureate expert.

What effect is the dollar having?

Gold has hit a 2-month low as strong economic data has emerged from the USA, dropping to . US consumer spending is on the up at a pace not experienced in two years, boosting inflation ever further. This comes on top of previous economic data that shows the US is weathering the global economic headwinds well.

The surprise data means that many investors think that the Federal Reserve will continue to increase interest rates, but much slower than before.

What is the relationship between gold and the dollar?

Gold and the dollar are often connected inversely – as gold rises, the dollar drops, and vice versa. The price of the pair is typically driven by the dollar though.

Since it is tied to the fortunes of the world’s most prominent economy and is used as a reserve currency across the world, the price of the dollar rises when the economic times are good, and drops in line with the US and global economy.

Gold, on the other hand, is seen as a safe haven, particularly against inflation. It’s also denominated in USD, so when the dollar rises against other currencies, the gold price rises, then drops in line with demand. When the dollar falls, gold drops, then rises as it’s bought in other currencies.

There is only being a limited supply of gold too – only 187,000 tonnes has been mined throughout history according to the US Geological Survey – and the relationship plays out similarly whenever there are economic troubles. You can see this in the price of gold – it rose precipitously during the early noughties recession, Great Recession, and in the wake of the Covid-19 pandemic.

Is the gold price likely to remain volatile?

So, will we continue to see the price of gold slide? Chances are, we will. Inflation in the US has been dropping back from historic highs over the past six months and is likely to continue this trend, so we’ll probably see gold dropping in lockstep. That said, we’re not out of the inflationary woods yet, so there may still be some surprises to come when it comes to the price of gold.

Company Details
Company Name : - RuchirCompany Website : - https://viralnewsonly.com/Company Aaddress : - Lodhi Road

Similar Press Release News

What You Should Know About China Wholesale Bulk Clothes
By sambit_ar 06/03/2323

In order to maximize profits, it is essential for every retailer to buy in bulk. But before you start buying wholesale21 clothing from China, there are some thi...

Read More
Major Miners in the USA and Impact on Economy
By sambit_ar 06/03/2323

The mining industry is a crucial part of the US economy, providing valuable resources that are used in a wide range of applications, from construction and manuf...

Read More
SCOPSIS joins the United Nations Global Compact Movement to drive sustainable growth and combat illicit trade
By Kingnewswire 24/02/2323

United States, 23rd Feb 2023 – SCOPSIS is a digital transformation firm that has paved their digital pathway to become one of the most regionally recogniz...

Read More
A thorough overview of wholesale e-commerce platforms, how to pick the best one for your company
By pareesh 22/02/2323

Wholesale e-commerce platforms have completely changed the game for companies of all kinds. They provide a practical approach to buying goods from numerous manu...

Read More