Gold Price Seeks Support After Soft Retail Sales Data

Gold prices gained on Thursday ahead of essential support after US retail sales slowed. 

Gold – Daily Chart

Gold – Daily Chart

Gold trades at $2,004; if the latest daily gain fails, $1,974 is supported. 

Gold prices were up after US economic data pushed the US dollar and Treasury yields lower, with the market focus shifting to commentary from Federal Reserve officials for hints on the first interest rate cuts. 

“Gold bulls seized on a surprisingly soft retail sales number to surge back above $2000,” said an independent metals analyst, Tai Wong. 

US retail sales dropped more than expected in January, while a separate report from the Labor Department showed initial jobless claims for unemployment benefits dropping 8,000 to a seasonally adjusted 212,000. The dollar index extended recent losses, while the 10-year Treasury yield slipped after the data, making non-yielding metals more appealing. 

Further data on Tuesday showed an unexpected rise in US consumer prices, which led to a 1.4% drop in gold. Traders are betting the Federal Reserve will wait until June before cutting rates. 

Meanwhile, gold-tracking exchange-traded funds have lost billions of dollars in outflows compared to last year. According to Bloomberg analyst Eric Balchunas, the leading 14 gold ETFs have suffered outflows of $2.4 billion this year. 

Balchunas added that he didn’t think gold ETF investors were migrating to Bitcoin ETFs, “but rather just US equity FOMO.” 

Gold has lost 3.4% since the beginning of the year, dropping to a two-month low of $1,993 per ounce in February, while Bitcoin is up 23% over the same period, hitting a two-year high of $52,483. 

Some countries, such as India, are strong buyers of gold. The demand for gold, which has been in a range of 700-800 tonnes annually since 2019, is expected to increase to 800-900 tonnes in 2024 due to economic growth and higher personal income. 

Switzerland, the United Arab Emirates, Peru, and Ghana are the leading gold suppliers to India. “I believe there is a strong demand now,” the WGC said. “But people want to be more comfortable with the price levels. They want a little more stability in prices”.

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