Gold declines following US Retail Sales Data

Gold price retreated from its intraday high of $2,470 after upbeat US Retail Sales data for July. Traders are widely anticipating the Fed will begin reducing interest rates from September. The July US CPI data boosted confidence that price pressures will return to the desired 2% rate. The US Census Bureau reported that monthly Retail Sales expanded at a faster-than-expected pace in July, with the retail sales data rising by 1% from expectations of 0.3%. gold is still in the green territory; trading at $2,456.20 at the time of writing.


While US Retail Sales remained robust due to strong demand for automobiles, they are less likely to impact firm speculation that the Fed will begin reducing interest rates from the September meeting but have dampened expectations for big rate cuts. Strong Retail Sales growth has prompted a sharp recovery in both the US dollar and bond yields. The US Dollar Index (DXY), which tracks the dollar’s value against six major currencies, jumps almost 0.5% above the crucial resistance of 103.00. 10-year US Treasury yields soar to near 3.94%.

Remarkably lower Initial Jobless Claims for the week ending August 9 have also strengthened the US Dollar and bond yields. Individuals claiming jobless benefits for the first time came in lower at 227K than estimates of 235K and the prior release of 234K, upwardly revised from 233K.

Gold price gives up its intraday gains after the release of strong Retail Sales data for July, but its near-term outlook remains firm as investors seem increasingly confident that the restrictive monetary policy stance by the Fed will start to be unwound in September.