Gold Retreats Following US Retail Sales Data

Gold price retreats from the daily highs near $2,371 as investors do not see Middle East tensions escalating further. US bond yields soar as the Fed seems to initiate the rate cut cycle from September.

The US Dollar has gathered some strength on the strong US Retail Sales data, while the gold price earlier, extended its downside to $2,330 in Monday’s New York session, before it was able to recover to $2343,61 per ounce at the time of writing.

The precious metal loses some of its shining in the very-short term as investors expect that geopolitical tensions will not escalate further.

Gold has been under some pressure due to the Federal Reserve’s (Fed) rate cut expectations for the meetings in June and July as well as a decrease in concerns about the Iran-Israel conflict getting worse. Until Fed policymakers are confident that inflation will return to the needed rate of 2%, they will support maintaining restrictive interest rates. Bond rates and the US dollar have increased in response to March’s stronger-than-expected monthly retail sales figures.

The US Census Bureau reported that Retail Sales grew by 0.7%, more than double from expectations of 0.3%. In February, Retail Sales were up by 0.9%, upwardly revised from 0.6%. Robust spending by US households remains a major catalyst to higher inflation, allowing businesses to charge higher from consumers.

The 10-year US Treasury yields rally to 4.61%, and higher bond yields weigh on the Gold price as they increase the opportunity cost of holding an investment in it. The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, prints a fresh five-month high at 106.16.

Gold price consolidates after retreating from fresh all-time highs near $2,430 as investors see Iran’s air strike on the Israeli state only as a retaliation to the attack on their embassy in Syria near Damascus. Tensions between Iran and Israel are not expected to escalate further, as Tehran said, “the matter deemed to be closed.”