Gold Trading Alert: Inflation cools but retail sales data is stronger than expected, the dollar rebounds slightly, gold prices rise and fall Provider FX678

On Wednesday (November 15), gold prices faced selling pressure as U.S. retail sales data for October fell slower than expected. Spot gold fell back after hitting a weekly high of $1,975.22 per ounce. The reason for its failure to hold above $1,970 was mainly due to the rebound in the U.S. dollar and the rebound in U.S. Treasury yields.

(Spot gold trend chart)

Spot gold closed down 0.19% on Wednesday at $1,959.25 per ounce.

COMEX December gold futures closed down 0.11% at $1,964.30 per ounce.

COMEX December silver futures closed up 1.76% at $23.538 per ounce.

[Market News Analysis]

Spot gold retreated on Wednesday after hitting a weekly high of $1,975 an ounce. XAU/USD struggled to hold above $1,970/oz, mainly due to a rebound in the US dollar and US Treasury yields.

In terms of U.S. economic data, the producer price index (PPI) fell by 0.5% in October, missing expectations of a 0.1% increase. The annual growth rate also dropped from 2.2% to 1.3%. Additionally, core PPI data was lower than expected. The figures were consistent with consumer price index (CPI) data released on Tuesday, which suggested inflation was cooling. Retail sales fell 0.1% in October, compared with expectations for a sharp decline of 0.3%.

Economic focus reinforced evidence of a push for the dollar lower on Tuesday, although the impact was different on Wednesday, likely due to a pullback. For now, risk appetite remains, U.S. bonds are strong, and the dollar remains fragile, all of which may support further gains in gold prices.

David Meger, director of metals trading at High Ridge Futures, said: “The CPI and PPI results are positive and continue to support gold prices as expectations that inflation will continue to fall increase expectations that the Federal Reserve has completed raising interest rates.”

On Thursday, the United States will release the weekly initial jobless claims report, industrial production and the Philadelphia Fed Manufacturing Index. If these data turn out to be positive, it could weaken demand for Treasuries, causing yields to rise, which could put pressure on gold prices.

Currently, money markets are pricing in a 100% chance that the Fed will raise interest rates in December, while investors are now turning to expectations for when the Fed will begin cutting interest rates.

Economists at TD Securities said, “Gold traders expect the Fed to turn dovish in late 2023/early 2024, which combined with strong official sector buying should continue to push gold prices above $2,100 per ounce in 2024 .”

While gold is considered an inflation hedge, rising interest rates have eroded the appeal of non-yielding gold.

Tai Wong, an independent metals trader in New York, said: “Gold moved lower after initial gains as yields were supported. I think the outlook for the (gold) asset will remain positive, but the trend will be more cautious.”

[Thursday focuses on financial data and events (Beijing time)]

①09:30 Monthly residential sales price report for 70 large and medium-sized cities in China
②21:30 The number of initial jobless claims in the United States for the week to November 11, the United States Philadelphia Fed Manufacturing Index in November, and the monthly rate of the United States Import Price Index in October
③22:15 Monthly rate of U.S. industrial output in October
④22:25 Fed Williams delivers a speech
⑤23:00 US November NAHB housing market index
⑥23:30 EIA natural gas inventory in the United States for the week to November 10
⑦23:35 Federal Reserve Board Governor Barr delivers a speech