Gold Gains After Retail Sales Came In Well Below Market Expectations In January

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Gold Gains After Retail Sales Came In Well Below Market Expectations In January
Credit: © Reuters.

Gold demonstrated strength, settling up by 0.29% at 61622, propelled by disappointing U.S. retail sales data and concerns over hotter-than-expected inflation. The U.S. Commerce Department reported a 0.8% decline in retail sales for January, coupled with a downward revision for December from 0.6% to 0.4%. These lacklustre retail figures reinforced worries about the United States' path to achieving a 2% inflation rate, with Fed Vice Chair for Supervision Michael Barr cautioning that the journey may be bumpy. 

The potential impact of inflation on price stability, jobs, and economic growth remains uncertain, prompting Barr to note that it's too early to predict a soft landing. Fed Governor Christopher Waller highlighted the challenges faced by the Federal Reserve in managing monetary policy amid surging inflation, necessitating a quick pivot to a tight monetary stance. Amidst these economic concerns, gold found support as a traditional safe-haven asset. 

The precious metal's rise was further buoyed by a gain in open interest by 0.08%, settling at 13,749 contracts, indicating fresh buying interest. Gold now has support at 61355, with potential downside testing of 61090. On the upside, resistance is anticipated at 61815, and a breakthrough could lead to testing levels around 62010. Additionally, positive signs emerged in the U.S. manufacturing sector, with data from the New York Federal Reserve and the Philadelphia Federal Reserve indicating an improvement in activity following sharp declines at the start of the year. 

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