Gold Soars Toward $4,400 as Rate Cut Expectations Rise
A weak jobs report in July led to a significant increase in gold prices. The US economy lost 23,000 jobs in July, which was a huge miss from the expected gain of 83,000 jobs.
The gap between the actual and expected job numbers pushed gold prices toward $4,400 per ounce, with silver reaching $65.05. This reaction may seem counterintuitive, but it is actually connected to a chain of monetary cause and effect.
The weak jobs report led to rate cut expectations by the Federal Reserve, which in turn lowered interest rates. Lower nominal yields then compressed real yields, making gold more attractive as an investment option.
A significant portion of the recent gold price increase came from physical demand, with central banks and private investors buying gold on conviction, not just speculation. This level of commitment is reflected in data showing that 55% of gold's recent move was due to physical demand.