(Bloomberg) — Gold edged toward $4,400 an ounce as traders weighed the Federal Reserve’s interest-rate path after the economy’s main engine showed signs of cooling.
The latest US data showed declines in both consumer sentiment and retail sales, helping ease fears of an imminent rate hike, which is typically a headwind for non-yielding bullion. Still, the risk of monetary tightening remains as oil prices climbed after the US threatened to impose economic measures on Iran.
Federal Reserve Bank of Chicago President Austan Goolsbee said he’s encouraged by a recent cooling in inflation, but wants to see more of the same in coming months to be sure it’s falling back to the central bank’s 2% target.
Earlier, data showed the University of Michigan’s preliminary August sentiment index slid to 51 in August. The median forecast from a Bloomberg survey of economists had projected 55. Meantime, retail sales dropped in July by the most in more than a year.
Gold’s recovery above the key $4,000-an-ounce threshold in recent weeks has been driven by renewed investor appetite and an increase in central bank purchases, notably from China. Gains earlier this week took the metal above its 100-day moving average for the first time since April, although it has since returned below the threshold.
“The macro setup has turned more constructive, although positioning is less supportive and technical momentum is starting to look stretched after the recent rebound,” Christopher Wong, a strategist at Oversea-Chinese Banking Corp., said in a note. “Consolidation risks remain around current levels.”
Spot gold traded 0.6% higher at $4,374.24 an ounce at 4:33 p.m. in New York. Silver rose 0.3% to $64.66 an ounce. Platinum and palladium both gained. The Bloomberg Dollar Spot Index, a gauge of the US currency, slipped 0.2%.
–With assistance from Mark Burton and Robin Paxton.
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