Kitco analyst Neils Christensen made important evaluations regarding the gold price today. Let’s take a look at Christensen’s comments.
The gold market is seeing a somewhat modest upward momentum as inflation pressures continue to increase as US governments encourage spending.
The Ministry of Commerce said on Friday that personal income rose 21.1% in March, following a 7.1% drop in February. The data exceeded expectations as economists expected a 20.2% increase.
While personal income data is better than expected, economists note that this does not mean a major shock to the markets as the government started sending $ 1,400 checks to adults as part of a $ 1.9 trillion stimulus package.
“The forecast for March personal income and spending was affected by the government’s continued response to COVID-19. In the report, the economic impact payments related to the 2021 American Rescue Plan Act, which entered into force on March 11, 2021, were distributed in March. ”
Although consumers saw their income increased last month, they were not in a hurry to spend it. In the report, it was stated that personal consumption increased by 4.2% compared to a 1% decrease in February last month. Economists expected consumption to increase 4.3%.
Some economists think it is only a matter of time before pent-up demand is released in the US, which is fueled by high savings rates.
Financial incentive payments rose to 21.1% with a one-time increase in income growth, leaving the savings rate at 27.6%. This will provide a catalyst for further increase in future spending as services continue to reopen.
Gold prices draw the attention of buyers in the first reactions to the latest consumption data. Gold futures for June were last traded at $ 1,769 / ounce.
According to some analysts, the precious metal appears to be reacting to rising inflation. The report noted that the core Personal Consumption Expenditure (PCE) Index, which eliminated variable food and energy prices, rose 0.4% last month from the previous 0.1% increase. Economists expect to see a 0.3% increase.
Core inflation for the year rose by 1.8%, significantly higher from the February reading of 1.4%. Headline inflation for the year increased by 2.3% from the previous 1.5% increase.
Market analysts noted that gold remains an attractive inflation protection. They also said that even if nominal bond yields rise due to increased economic conditions, rising inflation will keep real interest rates at historic levels in the foreseeable future.