What will happen to gold prices when the Federal Reserve cuts interest rates, strengthens the impact of terrifying data?

Gold, as a traditional safe-haven asset, tends to be favored by investors as global economic uncertainty increases. U. S. retail sales data (often referred to as "terror data"), an important indicator of consumer confidence and economic growth, often lead to significant market volatility.Financial markets are highly volatile. As the central bank of the largest economy, the Fed's monetary policy changes have a profound impact on the global economy and financial markets.

With the strengthening trend of interest rate cuts by the Federal Reserve and the release of a series of terrifying data, the value of gold as a safe haven asset has once again received attention. Terror data usually refers to economic data that has a significant impact on financial markets, such as the US non farm payroll report, consumer price index (CPl), etc. The release of these data often causes severe market fluctuations.

At present, the inflation level in the United States has significantly fallen, but the costs of food, rent, healthcare, and other necessities are still much higher than before the pandemic, which has caused dissatisfaction among the public. Review the Consumer Price Index for June in the United States. According to a report by The Wall Street Journal, data recently released by the US Department of Labor showed that the US CPI rose by 3.0% year-on-year in June, narrowing the increase by 0.3 percentage points compared to May and decreasing by 0.1% month on month. After excluding volatile food and energy prices, the core CPI increased by 0.1% month on month and 3.3% year-on-year, both narrowing by 0.1 percentage points compared to May, indicating signs of continued inflation slowdown.

It is worth mentioning that the release of terrifying data has a profound impact on gold prices.   In this case, investors may transfer their funds to safe haven assets, including gold. Therefore, poor economic data performance may have a positive impact on gold prices. Secondly, terrorist data often accompanies an increase in geopolitical risks. Against the backdrop of escalating geopolitical tensions, investors will seek safe haven assets to protect asset values. As a safe haven asset, gold's position will be further consolidated and its price will be boosted.

In addition, the Federal Reserve's interest rate cuts have also had a significant impact on gold prices. Firstly, the implementation of interest rate cuts: The Federal Reserve's interest rate cuts usually mean lowering the federal funds rate, which affects the level of short-term interest rates and subsequently affects long-term interest rates. The interest rate cut policy aims to stimulate economic growth and reduce borrowing costs, but it may also lead to increased inflationary pressures. Secondly, the impact on gold prices: On the one hand, interest rate cuts reduce the cost of holding gold and increase its attractiveness as an investment. On the other hand, interest rate cuts may also lead to a depreciation of the US dollar, thereby increasing the international purchasing power of gold denominated in US dollars. Against the backdrop of increased economic uncertainty and intensified market volatility, investors often seek safe haven assets to protect asset value.

However, from a long-term perspective, the gold price still has the potential to rise. The uncertainty and risk of the global economy remain high, providing sustained demand support for gold as a safe haven asset. Meanwhile, with the gradual recovery of the global economy and rising inflationary pressures, real interest rates are expected to decrease, which will further boost gold prices. However, in the short term, gold prices may fluctuate due to various factors. These factors include adjustments to the Federal Reserve's monetary policy, performance of economic data, and changes in geopolitical risks. Therefore, it is necessary to closely monitor the dynamic changes of these factors.

In summary, factors such as the Federal Reserve's interest rate cuts and the arrival of terrifying data have had a significant impact on gold prices. Against the backdrop of rising risk aversion and economic growth uncertainty, the value of gold as a safe haven asset has been further highlighted. At the same time, investors also need to remain rational when paying attention to the trend of gold prices, consider various factors comprehensively, and make cautious decisions. Finally, investors should also pay attention to controlling risks and avoid blindly following trends and speculative behavior.