The United States reported a 0.7% rise in retail sales. Should I sell Gold?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Sep 16, 2021
  • Gold has weakened more than 2% this Thursday and reached the lowest level in a month
  • If the price falls below $1700 support, the next target could be around $1650
  • The United States reported a 0.7% rise in retail sales

The gold price has weakened more than 2% this Thursday and reached the lowest level in a month after the U.S. dollar climbed following a better than expected rise in U.S. retail sales for August. The United States reported a 0.7% rise in retail sales, raising investors’ expectations that the Federal Reserve will soon begin tapering down monthly bond purchases.

Fundamental analysis: U.S. retail sales figures put pressure on Gold

Gold price remains under pressure this Thursday after the U.S. dollar climbed following a better than expected rise in U.S. retail sales for August. The better than expected results positively influenced the U.S. dollar, and the most significant force behind the Gold price slide is the appreciation of the U.S. dollar.

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Investors have started to behave nervously amid concerns that the Federal Reserve will have to tighten its ultra-loose monetary policy sooner than anticipated. Investors will continue to pay attention to the Federal Reserve commentaries looking for any clues, but surging COVID-19 cases could boost demand for Gold because this precious metal is considered a safe-haven asset.

“Risk appetite among market participants continues to be high, as reflected in steep rises in energy and base metals prices. Stock markets remain stable, and what is more, there has been an unexpected and considerable brightening of sentiment among industrial companies in the New York Fed district in September. Gold was not in demand in this market environment,” Commerzbank analyst Daniel Briesemann said in a note.

On the other side, Wall Street’s three main indexes continue to trade in a bull market while U.S. Federal Reserve Chairman Jerome Powell said that inflationary pressures are likely to be temporary. The coronavirus Delta variant is fueling concerns about the recovery path, but the U.S. economy continues to perform well.

The U.S. Initial Jobless Claims fell to the lowest level in almost eighteen months, and the renewed U.S. dollar strength on the back of robust U.S. data continues to negatively influence the price of Gold.

Technical analysis: $1700 represents a strong support level

Those whose interest is to invest in commodities like Gold should consider that the risk of further decline is still not over.

Data source: tradingview.com

The gold price has weakened more than 2% this Thursday, and if the price falls below $1700 support, the next target could be around $1650. The strong resistance level stands around $1850, and if the price jumps above this level, it would be a signal to trade Gold, and we have the open way to $1900. 

Summary

Gold price remains under pressure this Thursday after the U.S. dollar climbed following a better than expected rise in U.S. retail sales for August. The U.S. Initial Jobless Claims fell to the lowest level in almost eighteen months, and investors have started to behave nervously amid concerns that the Federal Reserve will have to tighten its ultra-loose monetary policy.

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