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US Economic Data and Other Factors Shaping Gold Prices Now

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Gold prices rise to three-month high

Gold rose to its highest level in three months on May 18, trading at $1,225 per ounce. Most of this rise was due to the declining US dollar as well as disappointing data coming out of US recently, including retail sales figures. The market consensus that the Federal Reserve would hold off on a rate hike until September or later also supported gold prices.

Later, gold gave away a portion of its gains to rising bond yields, which are negative for non-interest bearing assets such as gold.

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Gold indicators

Gold prices are affected by a host of variables. In this series, we’ll look at the following factors that investors can track to get a sense of what direction gold prices may be headed in:

  • timing of the Fed’s rate hike
  • Grexit concerns
  • US labor market data
  • gold demand in China and India
  • gold ETF holdings
  • US debt

We’ll also look at the impact of US data on both the dollar and gold prices (GLD). Then we’ll discuss factors such as the US labor market and inflation forecasts. These are the most important considerations that the Fed reviews before deciding on the quantum and timing of rate hikes. And the timing of the Fed rate hike has been the single most important variable influencing gold prices lately.

We’ll see how some of these indicators are supporting gold prices, and how others—such as US real interest rates—are putting pressure on gold prices.

These indicators should point you in the same direction as gold prices. They’ll also reflect or suggest movements in the share prices of companies in the gold mining sector, including Goldcorp (GG), Royal Gold (RGLD), Silver Wheaton (SLW), and Kinross Gold (KGC). Combined, these companies account for 19.1% of the VanEck Vectors Gold Miners ETF (GDX).

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