Gold and prices rose in Asian trade on Wednesday after soft U.S. retail sales data drummed up bets that the world’s largest economy was cooling, with focus squarely on upcoming payrolls data for more definitive cues.
Despite logging some gains this week, precious metal prices remained volatile after tumbling from record highs in late-January, and have struggled to recover since. Recent declines in the dollar, along with soft U.S. economic data, offered limited support.
Uncertainty over geopolitical tensions in the Middle East also kept haven-linked demand for gold under pressure.
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Spot gold rose 0.6% to $5,052.11 an ounce, while gold futures for April rose 0.9% to $5,076.40.oz by 01:02 ET (06:02 GMT). Spot prices remained about $600/oz off recent record highs.
Spot silver rose 1.7% to $82.1375/oz, while spot platinum rose 2.1% to $2,130.63/oz.
Metals advance after dollars falls on soft US retail sales data Precious metal prices logged small losses on Tuesday and rose on Wednesday after U.S. retail sales data for December read softer than expected.
ANZ analysts noted that gold’s recent rally was stalled by concerns that the metal had run "run too hard, too fast."
"With speculative positioning now largely washed out of the market, traders are looking for the next catalyst for another run higher. Weak economic data in the US prompted some buying," ANZ analysts said.
Tuesday’s retail sales print indicated that broader consumer spending in the world’s largest economy was cooling amid sticky inflation and pressure on the labor market. Sustained weakness in spending could present a weaker outlook for the economy.
A softer economic outlook could in turn push the Federal Reserve into cutting interest rates further this year to buoy growth. U.S. Treasury yields fell on this notion, while the dollar struggled to recover from steep losses clocked on Monday.
The dollar index fell 0.2% in Asian trade on Wednesday, extending declines from earlier this week.
US Nonfarm payrolls, CPI data awaited for more cues Nonfarm payrolls data, due later on Wednesday, is expected to offer more definitive cues on the world’s largest economy. Any signs of sustained labor market weakness are likely to drive up bets on rate cuts.
Lower borrowing rates tend to benefit gold and other non-yielding assets.
Still, markets remained broadly uncertain over U.S. monetary policy, especially after President Donald Trump nominated Kevin Warsh as the next chairman of the Fed.
Warsh is viewed as a less dovish pick– a notion that had triggered steep losses in metal markets since late-January.
Beyond the payrolls data, focus this week is also on consumer price index inflation data, due on Friday.
Labor market strength and inflation are the Fed’s two biggest considerations for adjusting interest rates.
