As the gold price (XAU/USD) hovers around $2,455 in the early Asian trading session on Friday, traders are closely monitoring the latest economic data. The US July Retail Sales exceeded expectations, rising by 1.0% month-on-month, while Initial Jobless Claims fell by 7,000 to 227,000 last week.
Despite the positive economic data, geopolitical tensions in the Middle East may limit the downside for gold. Traders are now awaiting the release of the US Michigan Consumer Sentiment Index for August, as well as data on Building Permits and Housing Starts.
Following the release of strong retail sales and employment data, concerns about a potential recession in the US have eased. However, market participants are still anticipating a rate cut by the US Federal Reserve in September. The CME FedWatch Tool indicates an 80% probability of a rate cut next month, with expectations of a 200 basis point reduction over the next year.
Recent data from the US Census Bureau revealed a 1.0% increase in Retail Sales for July, surpassing expectations of a 0.3% rise. Additionally, Initial Jobless Claims came in lower than expected at 227,000, down from the previous week. The strong economic data has bolstered the US Dollar and weighed on gold prices.
Despite the pressure on gold prices, geopolitical risks in the Middle East, such as the ongoing conflict in Gaza, continue to support the precious metal as a safe-haven asset.
Gold FAQs
Gold has long been considered a store of value and a safe-haven asset during times of economic uncertainty. Central banks are major holders of gold, using it to diversify their reserves and strengthen their currencies. The price of gold is influenced by factors such as geopolitical instability, interest rates, and the strength of the US Dollar.
In summary, the current economic environment, along with geopolitical tensions, retail sales data, and expectations of a Fed rate cut, are all contributing to the fluctuations in gold prices. Investors should keep a close eye on these factors to make informed decisions about their finances and investments.