Gold (XAU) Price Forecast: Will Retail Sales Data Trigger a Gold Market Surge?

Gold Prices Stabilize as Market Awaits Key Economic Data

Gold prices are showing signs of recovery on Thursday, following a 1% decline in the previous session. The downturn was driven by consumer inflation data that lessened expectations for a significant U.S. interest rate cut in September. As market participants turn their attention to upcoming retail sales data, gold is attempting to regain some of its lost ground.

At 10:11 GMT, XAU/USD is trading $2459.29, up $11.34 or +0.46%.

Gold Regains Footing After Inflation Data

Spot gold prices edged higher in the Asian session, recovering from their steepest drop since August 6. The decline was largely attributed to profit-taking triggered by lower prospects of aggressive rate cuts by the Federal Reserve. However, the market’s reaction to Wednesday’s U.S. Consumer Price Index (CPI) data may have been overly negative, with some traders now reassessing the extent of the sell-off.

The CPI data revealed a moderate increase in consumer prices for July, with the annual inflation rate dropping below 3% for the first time since early 2021. This development, while supporting the case for a rate cut, suggests that a larger reduction is unlikely. U.S. Treasury yields have risen slightly as investors digest this information and look ahead to further economic indicators.

Retail Sales Data in Focus

Attention now shifts to the U.S. retail sales data, set to be released on Thursday. Economists predict a 0.3% increase in retail sales for July, following strong figures from the previous month. Robust retail sales have been a key factor in the U.S. economy’s unexpected growth, despite looming concerns about a potential recession.

Traders currently estimate a 36% chance of a 50-basis-point rate cut in September, down from 50% prior to the CPI data release. The retail sales figures will be crucial in shaping market expectations and could influence the Federal Reserve’s decision-making process.

Market Forecast: Cautiously Bullish on Gold

In the near term, gold prices may continue to stabilize as the market digests recent economic data. The potential for a rate-easing cycle, combined with strong central bank demand and ongoing geopolitical risks, suggests that a bullish outlook for gold remains intact. However, the strength of upcoming economic data will be pivotal in determining the trajectory of gold prices.

Technical Analysis

XAU/USD is rising on Thursday after two consecutive lower closes. The market is poised either to challenge the all-time high at $2,483.74 or pull back to the $2,418.47 support pivot. Traders now face a key decision: buy into strength or wait for a support test.