After reaching a record high, gold was reluctant to continue its rise ahead of the Fed's meeting to cut interest rates this week. Gold prices yesterday fell to a low of $2560 from a high of $2586 after the US released retail sales data.
US Retail Sales rose 0.1% in August monthly, compared to a revised 1.1% increase recorded in July. However, this was above consensus expectations of a fall of 0.2%, according to data from the US Census Bureau.
US Retail Sales excluding Autos, meanwhile, rose 0.1% after a 0.4% rise in July. This was below the forecast of a rise of 0.2%.
The retail sales data does not seem to support the strengthening of the dollar, but the impact on gold is different.
Gold prices briefly soared to a new all-time high of $2,589 as bets on the Fed cutting double interest rates increased. According to the FedWatch tool from the CME group, the probability of the Fed cutting interest rates by 50 basis points rose by 67% while the probability of a cut by 25 basis points fell by 37%.
In theory, the Fed's interest rate cut will provide support for gold as a non-yielding asset. Many analysts provide bullish support for gold, one of which is Michaël van de Poppe, Founder of MN Consultancy, who predicts a 10 year bullish commodity market including gold.
Today there are no high impact news releases in the economic calendar, but investors will probably consider US Building Permits data which measures permits for building new residential buildings which is estimated at 1.41M from the previous revised data of 1.40M.
View attachment 7536
US Retail Sales rose 0.1% in August monthly, compared to a revised 1.1% increase recorded in July. However, this was above consensus expectations of a fall of 0.2%, according to data from the US Census Bureau.
US Retail Sales excluding Autos, meanwhile, rose 0.1% after a 0.4% rise in July. This was below the forecast of a rise of 0.2%.
The retail sales data does not seem to support the strengthening of the dollar, but the impact on gold is different.
Gold prices briefly soared to a new all-time high of $2,589 as bets on the Fed cutting double interest rates increased. According to the FedWatch tool from the CME group, the probability of the Fed cutting interest rates by 50 basis points rose by 67% while the probability of a cut by 25 basis points fell by 37%.
In theory, the Fed's interest rate cut will provide support for gold as a non-yielding asset. Many analysts provide bullish support for gold, one of which is Michaël van de Poppe, Founder of MN Consultancy, who predicts a 10 year bullish commodity market including gold.
Today there are no high impact news releases in the economic calendar, but investors will probably consider US Building Permits data which measures permits for building new residential buildings which is estimated at 1.41M from the previous revised data of 1.40M.
View attachment 7536
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