- Gold price rally stalls after strong US macroeconomic data.
- US Retail Sales exceed expectations, Industrial Production improved in August, boostinge US Dollar Index (DXY) to 100.92.
- Geopolitical tensions in the Middle East escalate with Hezbollah blaming Israel for recent blasts.
Gold prices fall ahead of the US Federal Reserve’s (Fed) monetary policy decision on Wednesday as the Greenback stages a recovery following a strong (relative to consensus) August US Retail Sales report. Therefore, US Treasury yields advanced, and the buck edged higher, a headwind for the golden metal.
The XAU/USD trades at $2,569, losing 0.50%. Expectations that the Fed will lower borrowing costs by 50 basis points (bps) remain at 63%, while odds for a 25 bps cut are 37%, according to CME FedWatch Tool data.
Data-wise, US Retail Sales were higher than expected, though they trailed July’s number, while Industrial Production improved in August.
TDS Senior Commodity Analyst Daniel Ghali noted that Gold’s last leg up “may have been a stop hunt, given the odd timing for an incursion into new all-time highs alongside evidence of new shorts being added by proprietary traders.”
At the time of writing, the US Dollar Index (DXY), which tracks the buck’s value against another six currencies, advanced 0.21% to 100.92, a headwind for Bullion prices. Meanwhile, US Treasury yields along the short and long ends of the curve rose.
Meanwhile, the Middle East conflict is at the risk of a possible escalation. Al-Jazeera reported that Lebanon’s Hezbollah blamed Israel for the spree of pager explosions, saying it will get “its fair punishment.”
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