Gold Price Bounces Back, Experts Talk Recession Question

Weekly August 5youtu.be

After dipping briefly below the US$1,700 per ounce mark in mid-July, gold is bouncing back.

The yellow metal has made a big move since last week’s US Federal Reserve meeting, nearly making it to US$1,800. It was back down around US$1,775 at the time of this writing on Friday (August 5) afternoon.

The Fed hiked interest rates last week by 75 basis points, as was widely expected by market participants. Major indexes have been on the rise, which Lobo Tiggre of IndependentSpeculator.com told me is unsurprising.

In his opinion, it was a little unexpected to see gold take off as well, but the precious metal seems to have been helped by recession commentary. To recap, Fed Chair Jerome Powell was questioned repeatedly at a press conference about whether the US is in a recession, and ultimately said that’s not the case.

“I do not think the US is currently in a recession, and the reason is there are too many areas of the economy that are performing too well” — US Federal Reserve Chair Jerome Powell

However, American GDP data released the day after Powell spoke cast doubt on his words. It shows the US economy contracted for the second quarter in a row during Q2 — the widely held definition for a recession.

“A recession is a significant, widespread and prolonged downturn in economic activity. Because recessions often last six months or more, one popular rule of thumb is that two consecutive quarters of decline in a country’s GDP constitute a recession” — Investopedia

I was at the Rule Symposium in Florida when these events were taking place, and the experts I spoke with definitely had a lot to say about the recession question, as well as the Fed’s path forward.

Rick Rule himself described the recession back-and-forth as political, while Dr. Nomi Prins, a geopolitical financial expert, investigative journalist and author, said she doesn’t see the Fed raising by 75 basis points again.

Aside from recession concerns, it’s worth noting that experts have pointed to US/China tensions and a softer US dollar as supporting factors for gold this past week.

With recession top of mind, we asked our Twitter followers this week if they think the US is currently in a recession. By the time the poll closed, about 70 percent of respondents had voted yes.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource and follow me @Charlotte_McL to share your thoughts!

I want to close out with a quick note on INN’s quarterly updates. Now that Q2 is over, our reporters are reaching out to experts in the many industries we cover, from gold to lithium to cannabis and more. Their goal is to give our audience a look at what’s happened so far in 2022 and what’s still to come.

This week we published updates for lithium and cobalt, two commodities that remain in focus due to their role in electric vehicles. In terms of lithium, experts continued to dispel the ideas put forth by Goldman Sachs (NYSE:GS), which recently put out a report suggesting the battery metals bull market is “over for now.”

For its part, cobalt took a breather in Q2 after prices saw strength in Q1 and doubled in 2021. Experts have mixed opinions on its outlook for the rest of the year, but believe China is key to watch.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.