Gold Update: Gold flat in the 2 quietest months of the year

In the last 45 years, the months of June and July have been the quietest months in the gold market. That was also the case in 2023. At Doijer & Kalff we saw a lower average number of orders in the past 2 months. Comparable to the months of June and July in 2022.

The gold price has remained flat in these 2 months. Gold ended May 31, 2023 at $1966 per troy ounce. The gold price closed on July 31, 2023 at $1964 per troy ounce. The silver price, as usual, moved more than the gold price. Silver closed at $25.05 on its last trading day in May. The closing price on the last trading day of July was $24.74. A decrease of 1.25%.

Gold has had its best performance in the month of September in the last 45 years. At the same time, this has been the bad month for equities. According to these data, investors in gold and silver are in for a good period.

US jobs report, inflation and higher interest rates

Last Friday, the latest US jobs report for July was released. It was expected to create 200.000 jobs. The actual (preliminary) figure came out at 187.000 jobs. A minor setback. It was also striking that wages rose slightly faster than analysts had expected.

Inflation in the Eurozone appeared to have fallen in July, according to preliminary Eurostat data. In July inflation was 5.3%. In June of this year inflation was 5.5%. Core inflation, the inflation rate excluding energy and food, remained the same at 5.5%.

Based on this figure, the ECB could raise interest rates by 25 basis points in mid-September. Inflation in the US is falling faster than in the eurozone. The FED started raising interest rates four months ahead of the ECB. As a result, the fall in inflation in the US is also further than in the eurozone.

The question is whether inflation will fall further. If we compare the current period with the period between 1972 and 1984, central bankers will have to watch out for an upcoming rise in inflation towards the old peak of 2022. Inflation fell sharply at the time, but then rose within more than 3 years to a higher level than the previous summit. At the time, it was Paul Volcker who raised interest rates to 20% to eventually bring inflation to 3%.

In Steno Research’s tweet below, the blue line is current inflation in the US and the black line is inflation from 1972 to 1984.

The 10-year interest rate in the US rose to 4.04% this week. Three years ago the interest rate was still at 0.5%. The national debt in the US has now risen to more than $ 32.000 billion. Interest payments on the national debt now amount to $1 trillion a year. This means that the national debt in the US will increase by more than 3% per year on the basis of the interest owed alone.

The Fed also has an option to raise interest rates again in mid-September. The chairman of the Fed, Jerome Powell, will make a decision based mainly on the July and August inflation data. The inflation figure in the US for July will be announced next Thursday at 2.30 pm (Dutch time).

If you want to buy gold or silver, open an account with Doijer & Kalff. We offer you full ownership of the precious metal in combination with secure and insured storage. From your online account, you purchase physical bullion that is stored under your name in Switzerland. The country where confiscation is not allowed and where the tradability of gold and silver is the highest.