Gold (XAU) Price Forecast: Softer Retail Sales May Signal Further Upside for Gold

Gold Rises as Inflation Data and Retail Sales Spark Market Interest

Gold prices climbed on Thursday, crossing above a critical Fibonacci support at $2,693.40, which now acts as a key technical level. The market focus has shifted to upcoming economic reports and policy implications that could drive further movement in the precious metal.

At 13:18 GMT, XAU/USD is trading $2708.10, up $11.83 or +0.44%.

Can Gold Sustain Momentum Beyond $2,726.30?

The short-term outlook for gold remains bullish as traders eye the December 12 high of $2,726.30. A break above this level could fuel a rally toward the all-time high of $2,790.17. However, a failure to hold the $2,693.40 support might signal a correction toward $2,663.51 or lower, with the 50-day moving average at $2,644.00 providing additional technical support.

Retail Sales and Tariffs Add to Gold’s Volatility

Thursday’s Retail Sales report is expected to be a pivotal factor influencing gold prices. Strong consumer spending data could raise concerns about persistent inflation, limiting the Federal Reserve’s scope for rate cuts. Conversely, softer numbers may bolster hopes for a dovish Fed policy, potentially lifting gold further.

Adding to inflationary risks, analysts are assessing the impact of potential tariffs under the incoming Trump administration. Any aggressive tariff measures could exacerbate inflationary pressures, complicating the Fed’s policy decisions and increasing gold’s appeal as an inflation hedge.

Fed Policy and Inflation Expectations Boost Bullion Demand

Gold found support from weaker U.S. core inflation data, reinforcing expectations of Federal Reserve rate cuts later this year. Traders are now pricing in the likelihood of two rate reductions by year-end, with the first possibly arriving in June. Meanwhile, easing inflation and falling bond yields have pressured the dollar, creating additional tailwinds for gold.

Geopolitical Stability Caps Safe-Haven Demand

Although bullish factors dominate, gold’s rise has been tempered by geopolitical developments, including a ceasefire agreement between Israel and Hamas. The easing of Middle East tensions has reduced the metal’s safe-haven demand, which had previously driven prices higher.

Market Forecast: Cautiously Optimistic

Gold’s technical strength and macroeconomic conditions suggest further upside potential. A move above $2,726.30 could signal an acceleration toward record highs, while robust retail sales or tariff-driven inflation risks may also support prices. However, geopolitical stability and strong U.S. consumer data could cap gains. Traders should watch for reactions to key economic reports and policy shifts to navigate this complex market environment.

More Information in our Economic Calendar.