The gold price rose yesterday and global stock markets fell after U.S. economic data disappointed the markets. The U.S. Department of Commerce confirmed that durable good sales fell in August and the Department of Labour confirmed unemployment applications are on the rise.
The gold price has risen 5% since the Federal Reserve decided against an interest rate rise last week. Rates in the U.S are now unchanged since June 2009.
Poor economic data may give the Fed an excuse to keep rates unchanged for longer. Unsurprisingly the U.S. dollar fell which boosted golds safe haven status. Historically gold and the U.S. dollar have a negative correlation. The last time gold broke through $1,150 per ounce was on the 24th of August.
The hysteria surrounding the Fed and interest rates is becoming ridiculous. It appears the Fed after months of so called forward guidance now wants to keep rates on hold. Many are suggesting the Fed is trying to bluff the market by pretending a raise is imminent.
After a week of stock market volatility caused by last week’s interest rate decision. Fed Chair Janet Yellen felt the need to calm the markets by announcing the Fed is still on track to raise rates this year. Messages from the Fed are becoming more and more confusing. Even the World Bank is at odds with the Fed after warning investors to brace themselves for a period financial turbulence if rates are increased.
Yellen broke down during her speech at the University of Massachusetts, although a spokesman for the University confirmed the 69 year old is fine after being checked by medical staff.