Gold spot price: US October Retail Sales and CPI push gold to fresh lows

on Nov 20, 2013
Updated: Oct 21, 2019
Listen Wednesday, November 20th:_ The XAU/USD yesterday oscillated within the range 1278.80 to 1269.07, lacking clear direction. The price opened at 1275.68 and closed at 1275.29 to form a doji candlestick pattern on the daily chart, so indicating market indecision.

Earlier in today’s trading, spot gold dropped to a fresh intraweek low, also the lowest price since 15 October, at 1256.16. At press time the pairing is trading at 1259.00.
Fed chairman Ben Bernanke stated last evening ET that the US central bank would in principle like to abandon quantitative easing in support of the economy and focus more on providing directions for future development (forward guidance), so as to maintain low short-term interest rates. He said that the timing of such policy change has not yet been determined and remains dependent entirely on consistent and lasting improvement in the labour market, plus inflation heading unmistakably towards the two percent target.

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The outgoing Fed chair also indicated that short-term interest rates would remain at their current near-zero levels for a significant period after unemployment falls below 6.5 percent, the precondition for starting to tighten monetary policy.
Retail Sales m/m in the US rose in October, with a significant contribution from the automotive sector but poor performances in some other key categories suggesting that consumers remain hesitant going into the important holiday shopping season.

October’s Retail Sales were up 0.4 percent from the unchanged September, beating expectations for a rise of 0.1 percent. The reading suggests little impact on US household spending during the 16-day federal government shutdown.
Core Retail Sales (excluding food and energy) rose by 0.2 percent in October, bettering expectations for a 0.1 percent increase.

The US Consumer Price Index, which measures the change in prices paid by US residents for any kind of goods and services, fell by 0.1 percent in October, being the first drop in the index since April. Core CPI (excluding food and energy products) rose by 0.1 percent.

On an annualised basis, the core CPI was up 1.0 percent in October, marking the smallest rate of increase since the same month in 2009. The non-core index rose by 1.7 percent y/y. Both results are below the US Fed’s target of two percent for price stability. Expectations had been for no change in the non-core index but for an increase of 0.1 percent in the core CPI.
The price action in spot gold increased in volatility following the CPI releases, with a drop to the ongoing intraday low.
Later today the Fed is due to release the minutes of the most recent FOMC meeting, affording possible insights into the committee’s intentions regarding quantitative easing.
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