"Gold prices recorded a modest corrective move in the previous session; however, they have remained firmly above the key psychological level of USD 5,000/oz, indicating that underlying buying interest is still present and the broader trend has not been broken. This price action reflects a more cautious market sentiment following a strong rebound, while also suggesting that the fundamental factors supporting gold have not yet weakened."
"The most important driver comes from the US economic outlook, which is sending increasingly less positive signals. Recently released data show that both headline and core US retail sales rose by just 0.0% month-on-month, well below market expectations of around 0.4% and 0.3%, respectively. This points to mounting pressure on US consumer spending amid a prolonged high interest-rate environment and persistently elevated living costs."
"In this context, expectations surrounding the US Federal Reserve's monetary policy remain a key determinant of gold's outlook. Although Fed officials continue to strike a cautious tone, the recent run of economic data is making it increasingly difficult for markets to sustain the narrative of interest rates remaining elevated for an extended period. As rate expectations shift in a more dovish direction, real yields and the US dollar tend to weaken, reinforcing gold's defensive appeal."
Gold prices briefly corrected but stayed firmly above USD 5,000/oz, signaling persistent buying interest and an intact upward trend. Market sentiment has become more cautious after a strong rebound, while core fundamentals continue to support gold. US retail sales rose 0.0% month-on-month, below expectations, pointing to pressure on consumer spending amid high interest rates and elevated living costs. The Employment Cost Index increased 0.7% quarter-on-quarter and import prices rose 0.1% month-on-month, suggesting easing inflationary pressures. Softer data are reducing the likelihood of prolonged higher rates, weakening real yields and the dollar, and reinforcing gold's defensive appeal. Medium- to long-term safe-haven demand and structural capital flows continue to underwrite gold.
Read at London Business News | Londonlovesbusiness.com
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