Gold Unable to Make Headway on Weak Retail Sales

Gold has lost ground in the Friday session. In North American trade, the spot price for an ounce of gold is $1324.61, down 0.37%. On the release front, US retail sales reports were dismal. Core Retail Sales slowed to 0.2%, missing the forecast of 0.5%. Retail Sales was even worse, posting a decline of 0.2%, compared to the estimate of +0.1%. On the manufacturing front, the Empire State Manufacturing Index dipped to 24.4, but this easily beat the forecast of 18.2 points. Later in the day, the US releases UoM Consumer Sentiment.

North Korea was back in the headlines on Friday, as the country fired a missile over Japan, which landed in the Pacific Ocean. A similar launch several weeks ago ratcheted tensions in the region and sent investors flocking to safe-haven gold. However, investors have not panicked just yet, as the stock markets and gold remain steady despite the North Korean provocation. If the US decides to respond forcefully to the North Korean move, however, nervous investors could return to gold and send the metal to higher levels.

Earlier in 2017, the Federal Reserve was full of optimism that a strong US economy would warrant three rate hikes during in 2017. Fast forward to September – the economy has generally performed well, but the US continues to grapple with weak inflation levels. A strong labor market has not helped push inflation higher, as wage growth remains soft. Fed policymakers have retreated from their earlier optimistic forecasts, and have been counseling caution and patience regarding rate increases. A December hike remains iffy, but the odds of a rate increase have slowly been moving higher, and are currently at 50%. CPI, the primary gauge of consumer inflation, improved in August. Could this be a sign that at long last, inflation is moving in the right direction? If the markets feel this is the case, the odds of a December hike should continue to increase.

U.S. Retail Sales Fall After Downward Revisions

Safe Havens Fall Amid Missile Fatigue

XAU/USD Fundamentals

Friday (September 15)

• 8:30 US Core Retail Sales. Estimate 0.5%. Actual 0.2%
• 8:30 US Retail Sales. Estimate +0.1%. Actual -0.2%
• 8:30 US Empire State Manufacturing Index. Estimate 18.2. Actual 24.4
• 9:15 US Capacity Utilization Rate. Estimate 76.8%
• 9:15 US Industrial Production. Estimate 0.1%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 95.1
• 10:00 US Business Inventories. Estimate 0.2%
• 10:00 US Preliminary UoM Inflation Expectations

*All release times are GMT

*Key events are in bold

XAU/USD for Friday, September 15, 2017

XAU/USD September 15 at 9:45 EST

Open: 1329.50 High: 1334.47 Low: 1321.47 Close: 1326.64

XAU/USD Technical

• XAU/USD edged higher but then retracted in the Asian session. The pair posted losses in European trade but has partially recovered in the North American session
• 1307 is providing support
• 1337 is the next resistance line
• Current range: 1307 to 1337

Further levels in both directions:

• Below: 1307, 1285 and 1260
• Above: 1337, 1367, 1392 and 1416

OANDA’s Open Positions Ratio

XAU/USD is unchanged in the Friday session. Currently, long and short positions are evenly split, indicative of a lack of trader bias as to what direction XAU/USD will take next. 

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