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How Does the Unemployment Rate Affect the Price of Gold?

By    |   Thursday, 30 August 2018 08:24 AM EDT

If you have had your eye on investing, you would have likely noticed that the unemployment rate affects the price of gold.

Each month a report is released containing Non-Farm Payroll and unemployment data, and the price of gold and silver notably fluctuates in the days leading up to and directly after the release of this information, according to the Michigan-based firm Profits Run, which specializes in mentoring potential investors.

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Experienced gold investors tend to closely monitor this data, released by the U.S. Department of Labor, which represents the total number of paid U.S. workers and the number of those seeking employment.

Chances are that somewhere down the line you have or will be advised to consider the state of the U.S. labor market in order to stay ahead of future gold movements, but what exactly is the link?

First, we need to take a look at what the unemployment rate is saying about the economy.

In a nutshell, a growing number of jobs means that things are thriving economically, while a decrease in numbers indicates more of an economic struggle, Profits Run reported.

If an economy is growing, there is an increased demand for production, which ultimately means an uptick in job opportunities as more businesses start hiring.

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When the economy is healthy, gold prices are lower. Meanwhile, when the economy is struggling, gold prices generally tend to rise, The Balance said.

This is because investors will buy gold in a weak economy as a hedge against inflation and economic crisis but are more likely to turn to other more profitable investments such as bonds, stocks, or real estate when the economy is healthy.

Gold is generally purchased when people are concerned about the economy, Sunshine Profits points out.

This was seen in 2016 in anticipation of Donald Trump’s presidential victory, which signified a massive economical boost.

At the time, Market Realist noted a dramatic fall in precious metals, at least in the short term, but whether this has any bearing on the long-term relationship between the unemployment rate and the price of gold is unclear.

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If you have had your eye on investing, you would have likely noticed that the unemployment rate affects the price of gold.
unemployment, rate, gold, price
Thursday, 30 August 2018 08:24 AM
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