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Gold gains ground as retail sales slide

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Gold has posted gains in the Thursday session. In North American trade, the spot price for one ounce of gold is $1311.55, up 0.40% on the day. U.S data was disappointment, highlighted by contraction in consumer spending. Retail sales fell 1.2% and core retail sales plunged 1.8%. PPI declined 0.1% and unemployment claims jumped to 239 thousand, well above the estimate of 225 thousand. On Friday, the U.K. publishes retail sales and the U.S. releases UoM consumer sentiment.

Consumer data has been dismal in January. Retail sales and core retail sales showed sharp contraction, and these numbers came on the heels of soft inflation indicators. Inflation remains low, despite a solid U.S. economy and strong labor market. CPI showed no change in January, and has failed to post a gain since November. Core CPI has recorded weak gains of 0.2% for four successive months. On an annualized basis, CPI gained 1.6% in January, the weakest year-over-year gain since mid-2017. The soft inflation numbers were a result of low energy prices, which fell 3.1% in January as oil prices remain under pressure.

Risk appetite has improved, as lawmakers in Congress have tentatively agreed on a proposal which will avert another government shutdown, which would take effect on Friday. However, the deal needs to be approved by Congress and President Trump. The agreement does not provide Trump with funding for a border wall, and the deadlock between Congress and Trump over this issue triggered a government shutdown in January which lasted 35 days. Both sides are eager to avoid blame for a second shutdown, and Trump hinted earlier in the week that he would go along with the deal, albeit with reservations.

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XAU/USD Fundamentals

Thursday (February 14)

  • 8:30 US Core Retail Sales. Estimate 0.0%. Actual -1.8%
  • 8:30 US Retail Sales. Estimate 0.1%. Actual -1.2%
  • 8:30 US PPI. Estimate 0.1%. Actual -0.1%
  • 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
  • 8:30 US Unemployment Claims. Estimate 225K. Actual 239K
  • 10:00 US Business Inventories. Estimate 0.3%. Actual -0.1%
  • Tentative – US Mortgage Delinquencies
  • 10:30 US Natural Gas Storage. Estimate -79B. Actual -78B

Friday (February 15)

  • 8:30 US Empire State Manufacturing Index. Estimate 7.1

*All release times are EST

*Key events are in bold

XAU/USD for Thursday, February 14, 2019

XAU/USD February 14 at 12:30 EST

Open: 1306.34 High: 1312.69 Low: 1302.45 Close: 1311.55

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1261 1284 1306 1326 1344 1365

XAU/USD moved slightly higher in the Asian session but gave up these gains in European trade. The pair has posted considerable gains in North American trade

  • 1306 is providing support
  • 1326 is the next resistance line
  • Current range: 1306 to 1326

Further levels in both directions:

  • Below: 1306, 1284, 1261 and 1236
  • Above: 1326, 1344 and 1365

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