Gold prices are attempting to maintain support around $2,600 per ounce as recent mixed U.S. consumption data fails to provide clear insight into the economic outlook.
The U.S. Commerce Department reported a modest increase in retail sales of 0.1% for August, following a revised 1.1% rise in July. This result surpassed economists’ expectations, which had forecasted a 0.2% decline. Over the past year, retail sales have risen by 2.1%.
Core retail sales, which exclude vehicle purchases, also increased by 0.1% in August, falling short of the anticipated 0.2% rise. Meanwhile, the control group, which reflects the basket used in GDP estimates, saw a 0.3% increase for the second consecutive month.
Despite the retail sales data being slightly better than expected, the gold market has encountered renewed selling pressure. December gold futures were last traded at $2,598 per ounce, down 0.42% on the day.
Analysts attribute the selling pressure to ongoing uncertainty regarding the Federal Reserve’s upcoming monetary policy adjustments. While significant easing is anticipated in Wednesday’s Federal Open Market Committee (FOMC) meeting, recent economic data suggests the U.S. economy remains relatively robust.
Michael Brown, Senior Research Strategist at Pepperstone, commented, “Although the retail sales data was marginally better than expected, it may only temporarily delay the dovish expectations leading up to the FOMC decision.” He added that he anticipates a 25 basis point rate cut from the Fed, with dovish guidance on future easing.
Olivia Cross, North America Economist at Capital Economics, echoed this sentiment, predicting a 25 basis point cut. She noted, “The control group sales data indicate strong consumption growth for the third quarter. Despite market expectations for a 50 basis point cut, broader data trends support a smaller rate adjustment, with recession fears seeming overstated for now.”
