Trading in gold and SPDR Gold Trust (ETF) (NYSEARCA:GLD) is being impacted on Friday morning by a steady dollar and U.S. retail data in focus.
Gold futures for December hit a session low of $ 1,340.55 in morning trading in Europe after earlier falling in Asian trade. The yellow metal declined 0.32% in Asian hours. Gold prices eased 0.14% a day earlier as it appeared that traders were booking profits following the previous day’s gains.
Focus on U.S. retail report
But investors are handling gold cautiously today with their sights set on the U.S. retail data. The U.S. is set to release its monthly retail data later on Friday and the report is closely watched as it should provide a clue as to whether the Federal Reserve will move quickly to raise lending rates or delay the rates review.
Though productivity data disappointed following a 0.5% drop compared by expectations for a 0.4% decline, labor data was impressive. U.S. employers created 255,000 jobs in July at a time when analysts were looking for only 179,000 jobs to be created in the month. The July growth built on a solid base in the prior month when the economy added 292,000 jobs.
Tepid U.S. retail data will be favorable for gold because it would diminish expectations of a rate hike by the Fed. Lower interest rates favor gold investing as it increases the appeal of the yellow metal as a safe-haven asset against a falling dollar.
Soft retail data would weaken the dollar, thus making gold cheaper for traders holding currencies other than the greenback.
But strong retail data would turn investors away from gold into yield-bearing assets such as bonds and equities.
Stronger dollar
The dollar was steady against a basket of global rivals on Friday, limiting the appeal for dollar-denominated gold.
China’s economic data
Chinese economic data showed retail sales in July increased 10.2% instead of 10.5% that economists forecast. Though the report has heightened economic uncertainty that should benefit gold trading, investors appeared to shrug off the report as they focus their attention on U.S. retail numbers.