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Biden Faces Political Headwinds Following March’s Inflation Report
March’s Hot Inflation Report is a Political Blow to Biden
President Biden’s recent comments on the possibility of a rate cut by the Federal Reserve were met with skepticism and concern as new data showed a re-acceleration in price growth across the economy. The implications of this inflation report could have serious political consequences for the Biden administration, especially as the president faces re-election in the near future.
During a news conference with Prime Minister Kishida Fumio of Japan, President Biden expressed his belief that the Federal Reserve would still cut interest rates this year, but acknowledged that the timing of the cut might be pushed back due to the recent uptick in inflation. This statement by the president, while not uncommon for sitting presidents to discuss interest rates, raised eyebrows among economists and market analysts who closely monitor Fed policy decisions.
Mr. Biden’s aides have emphasized the importance of maintaining the Federal Reserve’s independence, but his remarks on potential rate cuts could be seen as an attempt to influence monetary policy for political gain. The president has been relying on cooling inflation and subsequent rate cuts to improve his re-election prospects, as high inflation rates have previously hurt his approval ratings.
The news of a surprise increase in the inflation rate has led Wall Street analysts to speculate that the Fed may delay any rate cuts until after the November election, which could be detrimental to President Biden’s campaign. His Republican opponent, former President Donald J. Trump, has already criticized Mr. Biden for both rising prices and high borrowing costs, making the issue of inflation a focal point of the upcoming election.
Moreover, recent polls have shown a slight improvement in Americans’ views of the economy, which could be a positive sign for President Biden. However, public perception of inflation and government action to address rising prices will play a crucial role in shaping voter attitudes leading up to the election.
Despite these challenges, President Biden has continued to highlight his plans to address inflation and reduce costs for consumers. He has called on corporations to use their profits to lower prices and has proposed initiatives to increase housing availability and affordability. How effectively he communicates and implements these strategies in the face of stubborn inflation rates will likely influence his re-election bid.
In conclusion, the March inflation report poses a significant political challenge for President Biden as he navigates the economic landscape leading up to the election. His handling of the inflation issue and the Federal Reserve’s monetary policy decisions will be closely scrutinized by voters and opponents alike. The coming months will test the administration’s ability to address rising prices and restore confidence in the economy.
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Is now the right time to invest in gold as prices have cooled?
The price of gold has climbed to record highs recently and has remained strong through much of April. And, that growth continued until the precious metal traded at around $2,390 per ounce on April 19, 2024. But since, growth in the price of the precious metal has cooled, with gold’s price now hovering around $2,300 per ounce.
This lull in gold’s price may represent an investment opportunity.
In general, investing is centered around buying assets when prices are low and selling them when prices are high – generating a profit on the difference between the two. So, considering the declines in gold’s price over the past few days, now may be the time to make your investment. But is buying gold during this lull in prices really a good idea?
Compare your gold investment options among leading brokers now.
Gold prices have cooled. Should you buy in now?
With gold’s price down from recent highs, you may be wondering if now is the right time to buy in. There are several reasons the dip in gold’s price may represent an opportunity to buy. Here are some of the biggest:
Prices may rise again
If looking at a gold price chart shows anything for certain, it shows that changes in the overall growth of the medal come in fits and spurts. Periods of price growth are typically followed by periods of declines and vice versa.
But with inflation rising in recent months – and with gold’s reputation as a safe-haven asset that can hedge against inflation – it only makes sense that the price of the precious metal will eventually start to head up again in the future. While attempting to time that directional change may be tricky, buying the precious metal while the price is down gives you the opportunity to take advantage of any upward movement that may be ahead.
Add gold to your portfolio now before prices have a chance to rise.
You may be able to make a quick profit
Gold isn’t known as an asset in which you can earn a quick return, but in today’s market, that may be the case. Don’t forget that in January, gold was trading at just $2,000 per ounce. And, by mid-April, the commodity’s price had climbed to around $2,400 per ounce. That’s about 20% growth in a matter of months, much of which happened since March 1 – an impressive climb for any investment asset.
Perhaps more importantly, gold’s price growth through the beginning of 2024 shows that the commodity doesn’t have to be a buy and hold style investment that you keep in a safety deposit box or precious metal depository for years to come. There’s also the possibility that the commodity’s price could climb further ahead, making it a compelling way to potentially generate a quick profit.
There are other benefits of investing in gold
There are other benefits of investing in gold that have little to do with the price growth seen thus far in 2024 – or the lull in prices seen over the past couple of days. Those benefits include:
- Inflation protection: Gold has long been considered an inflation hedge, and for good reason. When inflation drives the prices of consumer goods and services up – and the value of the dollar down – gold’s price tends to rise. So, it could be used to maintain the value of your portfolio during inflationary economic conditions. That’s important in today’s economic environment as stubborn inflation continues to weigh on the value of the dollar.
- Portfolio diversification: Gold’s price doesn’t always move in the same pattern that bonds or stocks do. So, mixing a reasonable amount of gold into your portfolio (up to 10% of your portfolio assets) as a diversifier could protect you from losses should one or more of your traditional portfolio assets fall in value. “If you have less than 5% – 10% of your net worth in commodities & FX (forex), you should absolutely consider adding exposure to gold and other precious metals,” says Vijay Marolia, money manager and managing partner at the wealth management firm, Regal Point Capital.
The bottom line
Gold’s price has fallen from recent highs – which may represent an opportunity to tap into growth ahead. However, gold isn’t simply a “buy while it’s low and sell while it’s a high” kind of investment opportunity. The commodity can also protect your portfolio from the stubborn inflation we’ve seen thus far in 2024 while acting as a diversification tool that could increase your risk-adjusted portfolio returns. So, consider adding gold to your portfolio today while it has the potential to grow in value.
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