Gold has been an incredibly interesting commodity to watch throughout the beginning of the year 2016, and for good reason. Throughout most of the year thus far, the commodity has gained in value dramatically. However, last week, we saw dramatic movement, and it wasn’t in the positive direction. Recent economic data out of the United States showed strength, leading to declines in the value of the precious metal. Now the big question is, “Where will gold go next?” Today, we’ll talk about the economic data that sent the value of the precious metal downward last week, why it has any affect on the price of gold, what this could mean for gold moving forward, and what binary options traders should keep their eyes on when trading the commodity.

US Consumer Prices Show A Strengthening Economy

One of the biggest factors that economists look at when determining the strength of an economy is consumer prices. Essentially, when consumer prices are up, it means that consumer demand, and ultimately, consumer spending is on the rise. Last week, consumer price data for the month of April was released, and the data was overwhelmingly promising. According to the United States Labor Department, the consumer price index increased by a seasonally adjusted 0.4%. This was the strongest gain we’ve seen in the figure in about 3 years, and came in well ahead of the 0.1% gain we saw in the figure for the month of March.

What Does This Have To Do With The Price Of Gold?

From the outside looking in, it may seem as though consumer prices in the United States and the value of gold are two completely different topics. However, that’s not the case at all. The truth is that gold is a safe haven investment. As such, economic data plays a major role in the value of the commodity. Essentially, negative economic data generally causes investors to flock to gold in order to keep their money safe. This causes increases in demand and ultimately price. On the other hand, when economic conditions are positive, investors tend to sell gold in order to take advantage of the strong market trends that usually follow these types of reports. This leads to declines in gold.