Gold prices actually fell even though US Retail Sales slumped. The reason is, the US dollar began to strengthen because the selling action slowly subsided.
Gold prices slipped in the trading session Friday (14/January) tonight. Despite reported weakness in US Retail Sales, XAU/USD was down 0.19% at $1818.85.
Spot gold was trading steady at $1821.66 an ounce, while gold futures on the Comex in New York were up 0.1% at $1822.60. US Retail Sales data did dip to -1.9% in December. However, the US dollar actually strengthened slightly after the data so that gold prices slipped.
Markets Will Focus On Fed Policy
Responding to the latest US Inflation and Retail Sales data which fell compactly, investors began to split in considering the potential for monetary tightening of the Fed. Some parties expect the Fed to lower its hawkish sentiment, while others are optimistic that the Fed will not change their expectations.
"Gold acts as a placeholder in people's portfolios 'until things calm down'. In this case it's a look at where the economy is going," said Philip Streible, analyst at Blue Line Futures.
"Weak data this week could eventually cause the (USD) sell-off to widen in the markets or prompt the Federal Reserve to hold back on expectations of a rate hike, so gold gets a boost (to advance)," Streible added.
So far this week, the weakening of the US Dollar has led gold to gain around 1.4%, the highest in the last nine weeks. Gold is often used as a hedge asset when inflation is soaring. However, the increase in gold prices is difficult to be significant because the opportunity for the Fed to increase interest rates tends to strengthen the US Dollar and US Treasury bond yields.
According to TD Securities, after this the market will focus more on the Fed's policy. However, amid the lack of important economic data releases in the next few weeks, gold prices may be stuck at low levels or experience consolidation.
Post a Comment for "Gold Prices Drop After US Retail Sales Release "