Gold Fundamental Forecast: US Dollar Weighs Gold. Will US retail sales change course?

Gold Fundamental Forecast: Clumsy

  • Gold prices fell last week amid a broad risk-taking market movement
  • US retail sales data will indicate economic dossier this week
  • XAU direction may depend on how the Dollar responds to that data

Gold prices fell further last week as traders weighed in on the chances of an economic recession amid growing false Federal Reserve sentiment. It was reinforced by several inflationary prints from the United States. The April Consumer Price Index (CPI) crossed the threads at 8.3% y / y, beating analysts’ expectations of 8.1% y / y. The producer price index (PPI) for the same period revealed that factory gate prices remain very high at 11.0% y / y.

That set of inflation data helped push the U.S. dollar higher against most of its major peers. A stronger Dollar typically works at gold prices. The Euro pigeon, which is driving a lot of power, probably as a result of Finland’s announcement that it intends to vigorously pursue NATO membership. This provoked a strong reaction from Russia, with the controversial country promising to return, reinforcing the risk-taking tone that has plagued the eurozone.

Traders will be looking at several high-profile data prints this coming week that could affect XAU prices. The April print for U.S. retail sales may dominate broader market sentiment the most. Analysts see retail sales growing at a 0.7% m / m cut for April, according to a Bloomberg survey. A stronger-than-expected figure could allay fears of a looming contraction in economic activity. This is likely to help cool the U.S. dollar and perhaps raise gold by removing some risk aversion from the markets, as the dollar has largely acted as a haven for traders.

Gold vs. US Dollar Weekly Chart

Graph created with TradingView

— Written by Thomas Westwater, Analyst for

To contact Thomas, use the comments section below or @FxWestwater on Twitter

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