NewsBreak Original

Some economists and financial analysts are becoming worried about the growing prospect of a future recession in the United States (and around the world). Quoting an article published by CNBC:

The sun shines down on ARTPark in Lewiston, New York.Photo by J.M. Lesinski. New York State Governor Kathy Hochul recently revealed that New York state is now the top community solar market in the United States, pushing further towards her climate goal to achieve 70% of the state’s electricity from renewable resources by 2030.

The FOMC finally raised interest rates and signaled six more hikes this year. Despite the very hawkish dot plot, gold went up in initial reaction. There has been no breakthrough in Ukraine. Russian invasion has largely stalled on almost all fronts, so the troops are focusing on attacking civilian infrastructure. However, according to some reports, there is a slow but gradual advance in the south. Hence, although Russia is not likely to conquer Kyiv, not saying anything about Western Ukraine, it may take some southern territory under control, connecting Crimea with Donbas. The negotiations are ongoing, but it will be a long time before any agreement is reached.

The new monthly package of UK statistics highlighted the fine shape of the economy in January. For the month, GDP rose by 0.8%, against an expected strengthening of 0.2% and the three-month growth rate accelerated from 1.0% to 1.1%.

The Turkish lira has fallen back-to-back on each working day in March, having weakened against the US Dollar by 8.2% over this time and coming close to 15.0, where it was last seen in mid-December.

Gold prices declined in 2021 and the prospects for 2022 are not impressive as well. However, the yellow metal’s strategic relevance remains high. Last month, the World Gold Council published two interesting reports about gold. The first one is the latest edition of Gold Demand Trends, which summarizes the entire last year. Gold supply decreased 1%, while gold demandrose 10% in 2021. Despite these trends, the price of gold declined by around 4%, which – for me – undermines the validity of the data presented by the WGC.

The latest employment report strongly supports the Fed’s hawkish narrative. Surprisingly, gold has shown remarkable resilience against it so far. What a surprise! The US labor marketadded 467,000 jobs last month. As the chart below shows, the number is below December’s figure (+510,000) but much above market expectations – MarketWatch’s analysts forecasted only 150,000 added jobs. Thus, the report reinforces the optimistic view of the US economy’s strength, especially given that the surprisingly good nonfarm payrolls came despite the disruption to consumer-facing businesses from the spread of the Omicron variant of the coronavirus.

Gold didn’t shine in January. The struggle could continue, although the more distant future looks more optimistic for the yellow metal. That was quick! January has already ended. Welcome to February! I hope that this year has started well for you. For gold, the first month of 2022 wasn’t particularly good. As the chart below shows, the yellow metal lost about $11 of its value, or less than 1%, during January.

The World Gold Council believes that gold may face similar dynamics in 2022 to those of last year. Well, I’m not so sure about it. Have you ever had the feeling that all of this has already happened and you are in a time loop, repeating Groundhog Day? I have. For instance, I’m pretty sure that I have already written the Fundamental Gold Report with a reference to pop-culture before…

Gold soared as investors got scared by reports of an allegedly impending military conflict. Was it worth reacting sharply to geopolitical factors?. Gold has been performing quite nicely in January. As the chart below shows, its price increased from $1,806 at the end of December to around $1,820 this week, strengthening its position above $1,800.

Powell testified before the Senate. He didn’t say anything new, but gold rallied a bit. “We have totally screwed up inflation and now we are in deep trouble,” admitted Jerome Powell during his appearance before the Senate. OK, he didn’t formulate it exactly that way, but it was the message of his testimony. Powell admitted that theFedwrongly expected a faster easing of supply disruptions and thought that price pressures would be much lower by now. As a consequence, inflation was believed to be only ‘transitory’. Unfortunately, that’s not what happened.

Job creation disappointed in December. However, it could not be enough to counterweight rising real interest rates and save gold. On Thursday (January 6, 2022), I wrote that “the metal may find itself under hawk fire in the upcoming weeks”. Indeed,gold dropped sharply in the aftermath of the publication of theFOMC minutes. As the chart below shows, the hawkish Fed’s signal sent the price of the yellow metal from $1,826 to $1,789.

The start of 2021 wasn’t successful for gold: after a few days of rally, the yellow metal entered a bearish trend. 2022 looks uncomfortably similar. So far, so good – the first three days of 2022 didn’t bring a new catastrophe. It’s probably just the calm before the storm, but the new year started well. Even the price of gold has risen! As the chart below shows, the yellow metal managed to jump above the key level of $1,800 at the very end of 2021, but it still maintains its position (at least as of early January 3, 2022).