We’ve seen a number of disappointing economic reports this week, including yesterday’s announcement of a 0.4% drop in last month’s retail sales, and today’s release of industrial production data showing an unexpected 0.3% decline during December.
This raises the worry that the US economy is losing steam and where there is worry, you will find investors seeking out safe-havens.
Gold has risen for the last eight trading sessions in a row, jumping more than 1% today to stand at $1320 per troy ounce by mid-afternoon in New York. It’s advance of more than 4% this week is the biggest since last August.
The switch in sentiment towards the precious metal seems to reflect the flux of expectations towards Fed tapering. The Fed is saying tapering is likely to continue while at the same time saying no decision is pre-set and that if the outlook for the economy changes, asset purchases could even go up. The succession of soft economic data plays into the scenario of a deferment of tapering which, should it occur, would have a debasing effect on the dollar and this has re-ignited interest in gold as a store of value.