US August Retail Sales Preview: Can gold turn bullish on a weak print?

Retail Sales in US is expected to decline by 0.8% in August.
Loss of momentum in economic recovery could force Fed to delay taper.
Gold could turn bullish again with a daily close above $1,810.

Eren Sengezer FXStreet

The US Census Bureau will publish the Retail Sales report for August on Thursday, September 16, at 1230 GMT. Following July's contraction of 1.1%, investors expect sales to decline by 0.8% in August. Excluding automobiles, Retail Sales are forecast to fall by only 0.1%.

Although this data by itself is not a huge market mover, investors could put a lot of emphasis on it ahead of next week's highly-anticipated FOMC meeting. Combined with the deteriorating consumer sentiment and the uninspiring August jobs report, which showed an increase of 235,000 in Nonfarm Payrolls, disappointing Retail Sales data could force the Fed's hand to delay the reduction in asset purchases.

Moreover, Tuesday's data from the US revealed that the Core Consumer Price Index (CPI) in August edged lower to 4% on a yearly basis from 4.3% in July, supporting the view that the Fed could afford to remain cautious with regards to tapering. In that case, the greenback is likely to weaken against its rivals. Following the previous week's gains, the US Dollar Index struggled to preserve its bullish momentum and continues to fluctuate around mid-92.00s.

On the other hand, a better-than-expected Retail Sales print could help the USD stay resilient against its rivals but the potential positive impact on the dollar is likely to remain short-lived.

Gold technical outlook

After moving sideways in a relatively tight channel below $1,800 in the previous four trading days, gold shot higher on Tuesday fueled by the sharp decline witnessed in the US Treasury bond yields and the soft inflation report. The XAU/USD pair gained 0.6% and registered its strongest daily close in a week at $1,804 before going into a consolidation phase on Wednesday.

Despite Tuesday's upsurge, the near-term outlook remains neutral for the time being. The Relative Strength Index (RSI) indicator on the daily chart is holding near 50 and XAU/USD is still trading below the 200-day SMA.

On the upside, the initial resistance is located at $1,805, where the Fibonacci 23.6% retracement of the Aug. 10 - Sep. 3 uptrend is located. Even if the pair manages to climb above that hurdle, a daily close above $1,810 (200-day SMA) is required for gold to turn bullish. $1,817 (100-day SMA) and $1,830 (static level) align as next targets.

The first technical support could be seen at $1,800 (psychological level, 50-day SMA) ahead of $1,790 (Fibonacci 38.2% retracement) and $1,780 (Fibonacci 50% retracement).

Gold daily chart

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD turns lower toward 0.7000 after mixed Australian jobs data

AUD/USD is losing ground toward 0.7000 in the Asian session on Thursday, following the release of the Australian August jobs report, which showed that the Unemployment Rate rose to 4.6% versus 4.5% expected, while Employment Change beat estimates, arriving at 39.5K. Traders also remain unnerved ahead of the critical Trump-Xi meeting.

USD/JPY keeps the red near 158.00 as Japanese Yen firms up

USD/JPY retreats from three-week highs and holds losses near 158.00 in the Asian session on Thursday. Surging Japanese bond yields lift the Yen amid looming intervention risks, while the US Dollar preserves overnight gains to a two-month high amid hawkish Fed bets and elevated US bond yields.

Gold bears tighten their grip as Fed rate hike bets rise

Gold sticks to a negative bias for the second straight day, trading below the $4,300 mark or a one-week low during the first half of the European session as traders await a crucial meeting between US President Donald Trump and his Chinese counterpart Xi Jinping. Expectations for a major announcement are low, though market players will look for any progress on rare earths, technology restrictions, and an extension of the current US-China truce.

Bitcoin slips to $84,000 on rate hike bets – Worldcoin, Pepe lead losses

Bitcoin (BTC) price trades below $84,000 on Thursday, extending losses after a 2% decline the previous day. The pullback aligns with renewed inflation and rate-hike concerns, as US composite and services PMIs rose to 58.4 and 58.7 in September. Worldcoin (WLD) and Pepe (PEPE) recorded double-digit losses over the last 24 hours, emerging as the worst performers.

SNB leaves interest rates unchanged at 0%

Swiss National Bank leaves its key policy rates unchanged at 0%, as expected by market particiapnts. The key highlights of SNB’s monetary policy assessment are as followed: Banks' sight deposits held at the SNB will be remunerated at the SNB policy rate up to a certain threshold. SNB sees 2026 inflation at 0.7% (previous forecast was for 0.6%). The main risk to the economic outlook for Switzerland stems from developments in the global economy.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.