All Eyes On U.S Inflation Data For Clues On Gold’s Next Big Move – What’s Next?

Gold Demand Soars Amid Stagflation Fears

Traders are rotating into Gold at one of the fastest pace seen in more than a decade, to capitalize on the biggest macro themes driving the markets from persistent geopolitical tensions, strong central bank buying to red-hot demand from China as a hedge against economic instability in the world’s second-largest economy.

And last but definitely not least – stickier-than-expected inflation, which has seen Google searches for the term “Stagflation” surge over 600% this month.

There is no denying that Gold is everyone’s favourite trade when terms like “Stagflation” begin creeping into the headlines – just like we’re seeing right now.

As Gold prices continue their unstoppable upward momentum, eyeing new all-time record highs – analysts at GSC Commodity Intelligence are calling this the beginning of a “New Era” for the Precious Metal.

Data released last week, showed global demand for Gold has never been stronger. In the first quarter of 2024 central banks bought 290 tonnes of Gold – the biggest start to any year on record.

More impressively, Gold demand over the last 7 quarters has exceeded 40 million ounces on average. That’s almost 2 million ounces higher than the quarterly average from Q1, 2010 to Q2, 2022.

And it’s not just institutions flocking to Gold at an unprecedented pace right now. A similar trend is also emerging at the retail level.

According to a recent study, Millennials have leapfrogged Generation X and the Baby Boomers to become one of the most dominant and largest Gold-friendly demographic groups in the world.

All of this tells us one thing: demand for Gold shows no sign of slowing down anytime soon – which ultimately suggests that prices are only heading in one direction from here.

And that’s higher, a lot higher!

Fed’s Inflation Dilemma: A Bullish Case for Gold

As the world faces the real possibility of a “second wave” of inflation – the big question now is how will the Fed respond?

The answer to that question may come from the eagerly awaited U.S Consumer Price and Producer Price Inflation figures, due for release this week.

Fed officials have said repeatedly that they need to see clear evidence inflation is under control before the central bank will cut its benchmark interest rate. If that happens, the first rate cut could come in September – even with the presidential election looming in November. Two rate cuts could still happen this year.

Whichever way you look at it, one thing is clear. The macroeconomic backdrop for Gold in 2024 is looking more bullish than ever before – and it certainly won’t take much for prices to breach new record highs in the coming weeks and months ahead.