The price of gold fell sharply, reaching a two-week low move caused by the strengthening of the dollar, despite mixed US statistical data. However, soon the precious metal recovered almost all the lost ground against the background of partial profit taking.
The US Commerce Department reported that retail sales fell more than expected in August, amid weak purchases of cars and other goods, pointing to cooling domestic demand. According to the report, retail sales fell by 0.3 percent after a revised gain of 0.1 percent in July. Retail sales in July, as previously reported, were unchanged. Sales rose by 1.9 percent compared to the previous year. Excluding automobiles, gasoline, building materials and food services, retail sales were down 0.1 percent after falling 0.1 percent in July. It was expected that total sales will fall by 0.1 percent, while sales ain rise by 0.3 percent.
Overall, the latest data led market participants to revise their expectations concerning the tightening of monetary policy of the Fed in the short term. According to the futures market, the likelihood of tighter monetary policy of the Fed in September is 12% against 15% the previous day. Meanwhile, the probability of a hike at the December meeting is estimated at 51.2% compared to 52.9% yesterday.
ETF Securities analyst Martin Arnold said that the reluctance of the Fed to raise rates provides favorable conditions for gold, but even a small rate hike in December will lower the price of gold in the short term.
“The gold market on the defensive, remains under pressure, despite the clear and marked reduction of expectations of a Fed hike this month,” the source said HSBC.
The cost of the October futures for gold on the COMEX fell to $ 1319.3 per ounce.
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