Gold declines as dollar, yields strengthen following US retail sales data
Gold prices declined as the dollar strengthened and Treasury yields rose, driven by an unexpected increase in U.S. retail sales in March, on Monday.
This development raised concerns that the Federal Reserve might postpone interest rate cuts for the year. Spot gold saw a 0.5 per cent decrease, reaching $2,332.97 per ounce as of 10:18 a.m. ET (1418 GMT).
The dollar experienced a 0.1 per cent uptick, while 10-year Treasury yields reached a five-month peak. These movements were spurred by data indicating that U.S. retail sales surpassed expectations in March, providing further evidence of a robust end to the first quarter for the economy.
‘Gold prices rose above $2,400 to an all-time high in the previous trading session, as growing tensions in the Middle East prompted investors to seek refuge in the safe-haven assets. On the last day of previous week, tensions between Israel and Iran increased with the anticipation of US intervening, supporting an up-move in previous metals pack. A reportedly imminent attack by Iran on Israel is a real and viable threat, giving no details about possible timing. Market participants are awaiting further clarity on any possible development in this geo-political situation. Amidst the sense of panic, Gold and Dollar index are moving in tandem, highlighting that markets focus currently is more on geo-political tensions and less on interest rate changes,” said Navneet Damani, Senior VP – Commodity Research at Motilal Oswal Financial Services.
The market’s current outlook anticipates fewer than two 25-basis-point cuts by year-end, a revision from the earlier expectation of three cuts. On Friday, gold prices surged to a record high of $2,431.29, reflecting anticipation of Iran’s retaliatory strike against Israel.
Late Saturday, Iran launched explosive drones and missiles, marking the first attack on Israel by another nation in over three decades. This escalation has heightened concerns of a wider regional conflict.
Also read: Rising gold prices drive Indians into jewellery recycling; here’s what experts say
“Gold prices are seen stuck in a range after Friday’s correction, as trader’s remain focused on the geo-political developments in the middle-east very closely and any escalation could trigger a rise in demand for the safe-haven asset. Also in focus would be the incoming data from across regions for clues on the central banks rate cut path and speeches of some of the Fed officials later in the week,” said Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial.
Meanwhile, spot silver experienced a 1.3 per cent increase, reaching $28.23 following its recent nearly three-year peak in the prior session. Platinum declined by 1.1 per cent to $963.40, while palladium saw a decrease of 2.4 per cent, settling at $1,024.37.
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Published: 15 Apr 2024, 11:01 PM IST
