Gold Prices Fall After Stronger-Than-Expected Retail Sales Data
On Wednesday, November 15, gold prices fell in response to stronger-than-expected U.S. retail sales data for October. The spot gold price retreated after reaching a weekly high of $1,975.22 per ounce, failing to hold above $1,970 largely due to a rebound in the U.S. dollar and Treasury yields. Spot gold closed down 0.19% at $1,959.25 per ounce.
Analysts have attributed the pressure on gold prices to the rebound in the U.S. dollar and Treasury yields, along with the stronger-than-expected U.S. retail sales data. In addition, the producer price index for October fell by 0.5%, missing expectations of a 0.1% increase, and core PPI data was lower than expected. The figures were in line with consumer price index data released the previous day, suggesting that inflation was cooling.
David Meger, director of metals trading at High Ridge Futures, noted that consumer price and producer price index results continue to support gold prices, as expectations of an ongoing decrease in inflation raise expectations that the Federal Reserve has completed raising interest rates.
Looking ahead, on Thursday, the U.S. will release the weekly initial jobless claims report, industrial production, and the Philadelphia Fed Manufacturing Index. Positive data could weaken demand for Treasuries, causing yields to rise and putting pressure on gold prices.
Economists at TD Securities expect gold traders to continue pushing prices above $2,100 per ounce in 2024 based on the expectation that the Federal Reserve will turn dovish in late 2023 or early 2024, combined with strong official sector buying. While gold is considered an inflation hedge, rising interest rates have eroded the appeal of non-yielding gold.
Meanwhile, independent metals trader Tai Wong stated that he expects the outlook for gold to remain positive, but the trend will be more cautious. He noted that gold moved lower after initial gains as yields were supported.
Thursday’s financial data and events to watch include the monthly residential sales price report for 70 large and medium-sized cities in China, U.S. initial jobless claims, Philadelphia Fed manufacturing index, and industrial output, among other indicators and speeches from Federal Reserve officials. These events could further impact gold prices as the market responds to shifts in economic and monetary policy.