Gold Lower In Cautious Trade As Investors Eye U.S. Retail Data

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Gold prices edged slightly lower Thursday morning, as some investors booked profits following a day earlier gains while others moved to the sidelines. Gold mining stocks, however, continue to climb in a bullish sign for the metal.

Gold futures for December delivery had touched a session low of $1,345.95 a troy ounce in morning trade in Europe. Earlier in the day the price of the yellow metal eased 0.06%.

A day earlier, gold rose 0.39% as investors discounted expectations of an interest rate hike by the Federal Reserve at its next policy meeting in September. The once again fading expectations of a rate increase dragged the dollar down, making gold more affordable for foreign traders. But those traders appeared to be booking profits in today’s trade as they set their sights on U.S. retail data.

The U.S. is expected to release its retail data Friday and it is closely watched as it should provide clues on whether or not the Fed will raise lending rates before the end of this year. Upbeat jobs data already lifted rake hike sentiments before negative productivity data lowered them again.

But outside of the labor data, the Fed will be more interested in the quality of other economic data such as retail and housing before it decides to raise rates. Because investors are not sure what to expect in the coming retail report, they may be choosing to trade gold cautiously.

A bullish retail report could strengthen the dollar and lift investor appetite for bonds and equities. But gold prices could fall further because a stronger dollar dims the appeal of the yellow metal as an alternative investment and makes it more expensive for foreign traders.

A downbeat retail report could boost interest in gold as a safe-haven asset.

The price of the gold is still up almost 26% so far this year.

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