- Summary:
- US Retail Sales dropped unexpectedly in May, making safe haven gold an attractive option and interrupting the S&P 500 and Nasdaq Index hype.
Gold price rose on Tuesday as the market reacted to a decline in US retail sales. The yellow metal traded at $2,324 at the spot market after gaining 0.2 percent and was up by half a percentage point in the futures market to trade at $2,340 per ounce. The rise was peculiar for safe-haven gold as the S&P 500 Index came within two points of Monday’s new all-time high of 5,488 points. As the S&P hit the 30th ATH of 2024, the Nasdaq Composite followed a similar trajectory as it eased by 0.1 percent from Monday’s all-time high of 17, 935. Once more, the tech industry has provided fuel for the steady rise in US markets.
Evidently, gold has returned to the upside just a day after the exploits of the stock market assets, thanks to the decline in US retail consumption. US Retail Sales grew by 0.1 percent in May, significantly below the forecast figure of 0.3 percent. Core Retail Sales (excluding automobiles) contracted by 0.1 percent, lower than the forecast 0.2 percent. This is an indictment on the outlook of the US economy, and the effect of higher-for longer interest rates.
The impact of the lower-than-expected data was such that the market ignored the 0.9 percent growth in industrial production in May, which exceeded the forecast 0.3 percent growth. Furthermore, the figures affirm the decline in Consumer confidence levels in June, which came in at 65.6 this month, down from May’s 69.1 and even further less than the consensus forecast, as per the University of Michigan’s consumer sentiment index. Looking ahead, gold prices are likely to stay up on Tuesday and Wednesday when US markets close for Juneteenth holiday.
Technical analysis
The momentum on gold price signals that the bulls are currently in charge, as shown by the RSI indicator. The price is likely to pivot at 2327.18, and the upward action will likely continue if the bulls keep the price above that mark. The first resistance will likely be encountered at 2333.90, beyond which continued control by the buyers could push the price to test 2340.00. Conversely, a break below 2327.18 will favour the bears to take control, with the first support likely to be established at 2321.78. A breach of that mark will invalidate the upside narrative and potentially see further declines to 2314.86.
