If you’re a regular reader, you’ll know that the Federal Reserve has been mulling over plans to scale back its emergency COVID stimulus measures, though it’s far from certain when this will be. While there had been earlier signals that tapering would begin, it’s now been suggested that this could be delayed as disappointing recent employment data reconfirm that a full economic recovery is still a long way off with Delta cases now sweeping across many countries including the US. This hesitation from the Fed is good news for gold prices and makes the precious metal all the more attractive when combined with the price dip we have seen this week.
Economists had been hoping for an additional 700,000+ new jobs to be added going into September and the key festive period, but the official figures revealed that this target had been missed by some way, with just a fraction of new roles created. Data from the US Labor Department shows just 374,000 nonfarm payroll jobs were added in August.
The Fed has pushed back making decisions until the end of the year, although analysts expect to hear from them sooner. In the meantime, support for gold is set to increase further due to the uncertainty.
Analysts for TD Securities said it’s unlikely that stimulus measures will now be removed explaining, “After aggressively increasing long gold exposure last week, money managers again hiked their net long holdings as prices continued to migrated into £1,307/oz ($1,800/oz) territory. Investors also grew their long positions in response to signals coming from Fed Chair Powell, which suggested that the US central bank is tilting policy emphasis toward full employment and that it has no major inflation concerns, suggesting no material removal of stimulus.”