Gold prices retreated from earlier gains on Friday, as a stronger-than-expected U.S. economic performance pushed the dollar and Treasury yields higher. This data may influence the U.S. Federal Reserve‘s decision on the magnitude of upcoming interest rate cuts.
Globally, spot gold was up 0.3 percent at $2,454.40 per ounce by 1:46 p.m. EDT (1746 GMT), after reaching a high of 0.9 percent earlier in the session. U.S. gold futures ended the day 0.5 percent higher at $2,492.40.
The Commerce Department’s Census Bureau reported a 1.0 percent increase in U.S. retail sales last month, following a revised 0.2 percent decline in June.
Additionally, a Labor Department report indicated that the number of Americans filing new unemployment claims fell to a one-month low last week.
Following the release of this positive U.S. economic data, the dollar strengthened by 0.5 percent against other currencies, making gold more expensive for holders of other currencies. Benchmark 10-year Treasury yields also climbed.
Meanwhile, two Fed officials expressed support on Thursday for a potential interest rate cut at the U.S. central bank’s policy meeting next month, a shift from their previous stance of caution regarding premature rate reductions.
According to the CME FedWatch Tool, markets anticipate a 100 percent probability of a U.S. rate cut in September. However, the recent strong economic data has diminished the likelihood of a 50 basis point cut.
A low interest rate environment typically enhances the appeal of non-yielding bullion like gold.
India’s gold demand saw a modest uptick due to price corrections, though volatility prompted some buyers to postpone purchases. In China, premiums strengthened due to safe-haven buying, despite subdued retail sales of gold jewelry. Notably, the Chinese central bank did not increase its gold reserves for the third consecutive month in July. Singapore and Hong Kong witnessed stable premiums, reflecting consistent demand for bullion.
Spot silver gained 2.6 percent to $28.30 per ounce. Platinum surged 3.8 percent to $954.65, while palladium rose 0.5 percent to $940.04.
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