Gold Rises as Mixed US Economy Signals Leave Investors Divided

The price of gold rose as optimism grew that the U.S. economy could avoid a “hard landing” given the actions of the Fed to rein in inflation. Bucking a trend in which gold has seen losses on a weekly basis since February, this week saw the precious metal gain 1% at the start of the week.

The jobs data released in the United States contributed to this bullishness as the statistics indicated that it was unlikely that the country would slide into stagflation, a situation characterized by high inflation coupled with minimal economic growth. Austan Goosbee, president of the Chicago Fed, said that if there are other monthly reports similar to that of April, he would be certain that the nation’s economy wasn’t overheating and it would be easier to consider cutting interest rates this year. Given that bullion doesn’t earn interest, this indication of possible rate cuts this year boosted the market for gold.

Gold has so far risen by 12% since this year started. This has happened despite the high inflation and limited information on how soon the Fed would cut rates in the United States. The rally in the price of gold can be attributed to several factors, such as high demand for gold in Asia, massive purchases of gold by central banks, and safe-haven purchases triggered by geopolitical tensions and conflicts in the Middle East and Ukraine.

It is notable that the rally cooled a bit when fears of all-out war in many parts of the Middle East proved exaggerated as war didn’t break out between Israel and Iran.

Nevertheless, the Israeli military has been evacuating civilians from the city of Rafah, which could indicate that an assault on the city is imminent. This comes as talks between Hamas and Israel apparently stalled when Israel rejected the demand of Hamas for a permanent truce.

Any escalation in the Gaza war risks spilling over and opening up other fronts. For example, Lebanon-based Hezbollah has been conducting sporadic attacks on Israel, claiming that it is retaliating on behalf of Hamas. If such attacks escalate, it wouldn’t be surprising if the Israeli Defense Forces launch a major assault aimed at dislodging Hezbollah from its bases in Lebanon.

The gold market is sensitive to such conflicts, and the price could rise further if these fears of escalations materialize. If this happens, precious metals companies such as First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) may deliver exceptional shareholder value as a result of getting top dollar for any gold they put on market.

NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF

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