Gold and the dollar stabilized during today’s trading after weak US retail sales data reinforced bets that the Federal Reserve (the US central bank) would cut interest rates this year.
Gold in spot transactions fell 0.02% to $2,328.93 per ounce at the time of writing the report, while US futures contracts fell 0.06% to $2,328.90 per ounce.
Data released on Tuesday showed that US retail sales barely rose in May, indicating that economic activity remained weak in the second quarter.
Markets expert at IG, Yip Jun Rong, said: “The decline in Treasury bond yields last night and the slight dollar movements, after disappointing data on US retail sales, seem to provide some breathing room for the yellow metal.”
He added: “While US policymakers have indicated that interest rates may be cut only once in 2024, market price expectations tend to be more cautious.”
Lower interest rates reduce the opportunity cost of holding non-yielding gold.
The market’s focus is now on the US weekly jobless claims data tomorrow and Friday’s PMIs.
Gold prices received support after rising to a record level of $2,449.89 on May 20.
Hard currencies
The dollar stabilized today after the release of US retail sales data, while the British pound gave up some of today’s gains after the announcement of inflation data in Britain today, which showed a decline approaching the 2% level.
In its latest transactions, the euro recorded a slight decline to $1.0735, while the dollar index (which measures the performance of the US currency against 6 major currencies) stabilized at 105.26 points.
The British pound rose 0.14% to $1.2725, but thus declined from $1.2737 after announcing a decline in annual inflation in Britain to 2% last May, which is the target of the Bank of England (the Central Bank).
The Bank of England is scheduled to make a decision on monetary policy tomorrow, and it is expected to keep interest rates unchanged.
The Australian dollar achieved strong performance against the dollar, rising in its most recent transactions by 0.21% to $0.6669, adding to a rise of 0.66% in the previous session. In contrast, the New Zealand dollar fell by 0.16% to $0.6134.
There was little change in the Japanese yen, recording 157.89 against the dollar.
Oil
Oil prices fell slightly today, but remained near their highest levels in 7 weeks, as the market balanced concerns about escalating conflicts with concerns about demand in the wake of an unexpected increase in US crude inventories.
Brent crude futures fell 7 cents, or 0.09%, to $85.25, while US West Texas Intermediate crude fell 13 cents to $81.44 per barrel.
Both benchmarks rose by more than a dollar in the previous session after a Ukrainian drone strike led to a fire at an oil terminal in a major Russian port, according to Russian officials and a Ukrainian intelligence source.
In the Middle East, Israeli Foreign Minister Yisrael Katz warned of an imminent “all-out war” with Lebanese Hezbollah, even as the United States tries to avoid a widening conflict between Israel and Hezbollah, which is allied with Iran.
The escalation of the war in the region raises the possibility of disruption of oil supplies from major producers.
Reuters quoted Yip Jun Rong, a market strategist at IG in Singapore, as saying that oil prices have rebounded strongly over the past two weeks amid risks of possible disruptions to oil supplies “in the event of a broader conflict erupting as geopolitical tensions have moved to a new front, which is Israel.” And the Hezbollah group.
He added: “It appears that calming the conflict between the two parties is difficult in the near term, which will keep oil prices high despite investors in the oil market ignoring the weaknesses on the economic front from retail sales in the United States, which were weaker than expected to a mixed set of data issued by China this year.” the week”.
Data released by China this week showed that growth in industrial production in May was below expectations, but retail sales, which reflect the level of consumption, witnessed the highest growth rate since last February.
Preventing a further rise in oil prices, US crude inventories increased by 2.264 million barrels in the week ending June 14, according to market sources, citing figures from the American Petroleum Institute on Tuesday.
The sources, who spoke on condition of anonymity, said that gasoline stocks decreased by 1.077 million barrels, while distillate stocks rose by 538 thousand barrels.
Official US inventory data from the Energy Information Administration is scheduled to be released today.
