After experiencing its worst monthly performance in the last 5 years in June with a drop of -7.01%, the price of gold began the month of July with two consecutive days of positive performance. So far this month, the price of gold has risen + 0.71%.
This Friday the United States Department of Labor published its monthly report for June. Non-farm payrolls registered an increase of 850,000 workers, the best performance since August last year and exceeding the 703,000 expected by analysts.
The unemployment rate remained relatively stable at 5.9%, compared to the level of 5.8% reached in May but above the 5.7% estimated on average.
But the information in this report that could have the greatest influence on the price of gold is the variation in the average income of workers, given its relationship with the potential increase in consumption and its effects on inflation. This data registered an annual increase of + 3.6%, remaining within the expected range.
After this report was published, the price of gold remained in positive territory, although far from the highs of the day, reflecting that these figures contribute little to the thesis of an uncontrolled increase in inflation.
Recall that, given the current economic situation, there are two basic approaches to the direction that the price of gold could take: on the one hand, if inflation accelerates its rate, investors would seek refuge in the precious metal causing an increase in its price.
On the other hand, if the economy maintains its growth path and the Federal Reserve manages to control inflation, there will be better economic prospects and the need to seek protection in gold would decrease, so that the demand for this metal would fall as well as its price .
The price of the gold futures contract has remained within a consolidation channel during the last two weeks, after the violent correction experienced during the first half of June.
The 1780 level has been important in the recent past and it will probably take an additional catalyst to generate a decline in search of the year’s lows or a price recovery.