Last year, Goldman Sachs predicted that gold prices would decline because of little or no improvement in economic growth. Additionally, the investment bank forecasted several price falls throughout 2014. Despite this year’s minimal growth in the global economy and the downfall of stocks, the failure of financial instruments has only amplified the industrial demand for the yellow metal. But one factor that could challenge gold as a hedge is the rising employment rate in the US.
Gold held steady for the week as it oscillated around the 1,320 dollar mark, but the growth in the job market has got financial analysts assessing downward trends for the precious metal. When news broke of improved hiring rates, gold for August delivery dropped by $10.30. A report from Associated Press revealed that a total of 288,000 workers were added to the Labor Department’s payrolls in June. Last month was preceded by an addition of 224,000 workers. The economy is growing, and the increasing availability of jobs has veered investors away from the gold market, bringing down unemployment to 6.1% and gold futures by 0.9%. Those interested in the subject can visit BullionVault to compare the price today to the declining unemployment rate.
Speculation continues as gold weakens, yet progressive expansion in the job market doesn’t seem likely when the public is more concerned with raising the minimum wage rather than decreasing the employment rates. Although employment opportunities have increased, 3.37 million Americans are still jobless and have been for the past 27 weeks. It may not be as dramatic as the unemployment rates in 2010, but increasing the minimum wage could potentially offset current developments and the country could relapse into devastating statistics again. Unless unemployment continues to drop in the next few months, people will still look to gold to balance their finances.