Gold rises to near US$4,400 as weak retail data weighs on U.S. dollar

One kilogram gold bars at the ABC Refinery smelter, operated by Pallion, in Sydney, Australia, on April 17, 2025. Photo by Brendon Thorne/Bloomberg

Article content

Gold extended a two-week advance as weaker U.S. retail sales data weighed on the U.S. dollar, making bullion cheaper for most buyers.

Article content

The yellow metal rose as much as 0.9 per cent before paring gains to trade near US$4,400 an ounce, after ending the previous week almost one per cent higher. Latest U.S. data showed declines in both consumer sentiment and retail sales, helping to ease fears of an imminent rate hike, which is typically a headwind for non-yielding bullion.

Article content

Article content

Article content

A gauge of the U.S. dollar was down by 0.2 per cent on Monday, making bullion that’s priced in the currency cheaper. The yield curve — referring to the gap between the long-term and short-term Treasury yields — was also steepening.

Article content

Article content

“Markets don’t believe the Fed is truly hawkish in the near term,” said Justin Lin, an analyst at Global X ETFs. Money markets are pricing in less than one third of a chance of a rate hike at the Fed meeting in September, down from more than 70 per cent at the start of the month.

Article content

Still, volatility continued to shroud the global energy supply outlook, showing that the risk of monetary tightening has not gone away. More ships came under attack in the Strait of Hormuz late last week, while the U.S. said it was preparing to impose new measures aimed at crippling Iran’s economy.

Article content

Article content

Some vessels exiting the strait with satellite transponders turned off have helped to keep global energy prices in check. Iran and Oman also appear to be edging closer to a deal on how the critical waterway should be managed, although the U.S. isn’t party to those talks.

Article content

Gold’s recovery above the key US$4,000-an-ounce threshold has been driven by renewed investor appetite and an increase in central bank purchases, notably from China. Gains last week took the metal above its 100-day moving average for the first time since April, and it continues to hover near that level.

Article content

Article content

Bullion “will require a meaningful break above US$4,400 to confirm that its positive momentum has further room to run,” said Global X ETFs’ Lin. “The recent bounce, while mostly driven by technicals, has also priced in most of the positive catalysts from the past week, so we may see gold trade relatively flat” until the next clear catalyst, he added.

Article content

Article content

The minutes of the Fed’s July policy meeting due for release on Wednesday are set to provide some clarity on rate considerations.

Article content

Spot gold was 0.4 per cent higher at US$4,394.38 an ounce at 2:20 p.m. in Singapore. Silver rose 1.6 per cent to US$65.73 an ounce, after gaining almost two per cent last week. Platinum and palladium advanced. The Bloomberg Dollar Spot Index, a gauge of the U.S. currency, was down 0.2 per cent.

Article content

With assistance from Wendy Wells

Article content

Article content