Gold changes trend in early August

The world gold price increased by 8 USD/ounce, to 1,958 USD/ounce. Gold bulls this week focused on recent upbeat economic data from the US and the European Union that could suggest better commercial and consumer demand for the precious metal in the coming months.

However, recent upbeat economic data from China should keep precious metals traders from getting too excited. Gold needs strong news to be able to rise to record highs.

“Gold is at a standstill as investors continue to focus on tight monetary policies and the US money supply,” said John LaForge, head of real asset strategy at Wells Fargo Investment Institute. decline.

The fact that the US Federal Reserve (Fed) is nearing the end of its tightening cycle and gold may be nearing the top of a long-term bull market is only a matter of time before the US Central Bank starts pumping money. return to financial markets to keep the economy from falling into recession.

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According to technical analysis, PMI falls below 50 points, which means China's manufacturing sector is shrinking.

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According to the National Bureau of Statistics of China, the sector shows weakness in China's manufacturing activity, in addition to the impact of external factors limiting orders, the internal production units still exist. weaknesses, although the Government of this country has lifted measures to prevent the Covid-19 epidemic since January.

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Today, the European Economic Area announced GDP growth in the second quarter of 2023 increased by 0.3%, higher than the forecast of 0.2% and higher than the 0% rate of the first quarter of 2023.

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According to analysts, the European economy has escaped the recession after the previous two quarters of weakness. However, economies in this region still show many concerns, such as persistent inflation, geopolitical tensions, and high interest rates.

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According to analysts, gold prices jumped today as investors moved away from the "greenback" after the European Central Bank (ECB) raised interest rates, helping the euro appreciate against the US dollar.

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Data showing higher economic growth in Europe and a slight softening in inflation, a stronger euro and a weaker dollar have helped strengthen gold, said Carlo Alberto De Casa, market analyst at Kinesis Money. short-term recovery. The risk of a recession and the expectation that central banks will be more dovish next year are the main catalysts supporting gold prices.

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It is only a matter of time before the US Central Bank starts pumping money back into financial markets to keep the economy from falling into recession. When that happens, fear will increase in the market and push gold prices higher.

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In an interview with Kitco News, Juan Carlos Artigas, head of research at WGC, said the banking crisis in May with the collapse of several regional banks in the US had ended demand. gold lining material and coins in North America. He added that the fact that global uncertainty is supporting jewelry sales in key markets like China.