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Gold Starting to Recover from Market Beating After Positive US Economic Data

August 9, 2016 at 17:12 by Andrew Moran

Gold prices are beginning to recover after the beating it took during Friday and Monday’s trading sessions. With the US economy adding more than 250,000 jobs in July, the yellow metal substantially declined. But gold is starting to show that it has plenty of life still in it.

December gold futures rose $7.18, or 0.48%, to $1,340.58 per ounce at 16:45 GMT on Tuesday.

Silver has also been inching upwards, too. September silver futures climbed $0.04, or 0.18%, to $19.80 an ounce. Gold’s companion has not traded this low since July 21.

Both gold and silver are still having an incredible 2016. Year-to-date, gold is up more than 23%, while silver is up about 42%.

The yellow metal has been plummeting since the US Department of Labor reported that the economy added 255,000 jobs, while the unemployment rate stood still at 4.9%. Not only is this giving investors confidence, but it is also providing ammunition for the Federal Reserve pertaining to interest rates.

The US central bank is expected to raise rates sometime this year, and many analysts have pointed to September as the ideal time. However, according to the CME Group FedWatch tool, there is just an 18% chance of a September rate hike. That figure does spike to 47% in December.

One of the reasons why gold is starting to recover on Tuesday is because of accommodative monetary policies from central banks outside the US. The Bank of Japan (BOJ), the European Central Bank (ECB), and the Bank of England (BOE) have all recently slashed interest rates, launched monetary stimulus efforts, and presented tepid economic outlooks.

Gold also benefited on Tuesday when it was announced that China increased its demand for the precious metal. The Chinese government had lifted its gold holdings from $77.43 billion to $78.89 billion. China is presently one of the world’s biggest holders of gold.

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