The price of gold (XAU/USD) relinquished its earlier gains, falling from near $2,470 during Thursday’s North American session. This decline comes in response to robust data from the United States Census Bureau, which revealed a faster-than-anticipated expansion in monthly Retail Sales figures for July. The Retail Sales report, a critical metric reflecting consumer spending patterns influencing inflationary trends, surged by 1%, surpassing the projected 0.3% increase. Notably, June’s retail sales performance, initially reported as flat, was revised downward to a contraction of 0.2%.
Despite the resilience in US Retail Sales, particularly driven by robust demand for automobiles, the data is unlikely to significantly alter expectations surrounding the Federal Reserve’s upcoming interest rate decisions, dampening hopes for substantial rate cuts. The strong Retail Sales growth has fueled a notable recovery in both the US Dollar (USD) and bond yields.
The US Dollar Index (DXY), which monitors the USD’s value against a basket of six major currencies, surged by nearly 0.5%, breaching the critical resistance level of 103.00. Concurrently, 10-year US Treasury yields climbed to approximately 3.94%. Elevated yields on interest-bearing assets typically pose challenges for non-interest-bearing assets like gold, as they raise the opportunity cost of holding such investments.
Moreover, a surprising decrease in Initial Jobless Claims for the week ending August 9 has further bolstered the US Dollar and bond yields. New filings for jobless benefits stood at 227K, lower than the anticipated 235K and the revised 234K from the previous release, which had been adjusted upward from 233K. These developments have contributed to the strengthening of the US Dollar and bond markets, exerting downward pressure on gold prices amidst a dynamic economic landscape.
