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Gold Down Amid Better Than Expected US Retail Sales

Mauricio Carrillo

Gold is trading down on Tuesday as investors are digesting a better than expected retail sales in the US. The data fueled the dollar index; then it added pressure to XAU/USD.

US reports a better than expected retail sales

Retail sales in the United States rose more than previously expected by the market. All headline, as well as the small print, showed improvement, wiping up speculations for a 50-basis point cut by the FOMC.

Never underestimate the spending power of the US consumer, in June, retail sales control group rose 0.7%, well above the 0.3% expected by market. May data was revised up to 0.6% increase from 0.5% previously posted.

Retail sales advanced 0.4% in June, above 0.1% expected by market. Ex Autos, retail sales also rose 04% monthly, above 0.1% anticipated by experts.

The consumer market in the United States looks healthy; the average growth in the control group in the last six months has been the highest in decades. It is hurting speculations for an aggressive 50-basis point cut in the next Federal Reserve meeting.

The number is sending the dollar index up and, at the same time, gold down.

Dollar index reacts to the upside after retail sales

The dollar index is adding gains following the better than expected retail sales in the United States. Following the data, DXY jumped to break above the 50-day moving average at 97.20 and to trade at 97.40, its highest level since July 10.

Technical conditions suggest more room for the upside in the short term. It is hurting metals, and it is pressuring down the XAU/USD.

Gold down for the second day, but losses remain limited

XAUUSD daily chart July 16

Gold is trading slightly down on Tuesday as investors are digesting retail sales data in the United States and a subsequent strong dollar.

On Tuesday, XAU/USD is trading 0.27% negative in the day at 1,410. The unit looks contained by the 1,420 resistance and supported by the 20-day moving average at 1,405.

Technical conditions suggest a lack of stamina in the metal so that any upside move would be limited.

“The current price action suggests that investors have turned neutral on gold at this time,” FX Empire James Hyerczyk said in a recent article. “Money is flowing into equity markets, which indicates a relative calm.”

To the downside, gold will find next support at the mentioned 1,405 level. Then, the chart shows an active buying zone around 1,380. In the case the metal goes beyond that level, it will go down to test the 1,345 area.

To the upside, gold needs a break above 1,405. Then, 1,425 and 1,440 are the resistances to focus.

Metals report for July 16, 2019

Silver jumped to test the 15.45 area on Tuesday, but it failed to sustain gains. Now the unit is trading 0.10% positive on the day at 15.40. XAG/USD is testing July 3 highs at 15.46. A break above that level would open the door for a test of the 15.60 multi-month top.

Copper is trading flat on Tuesday as the unit was unable to keep prices at 2.7265. The unit is now 0.05% negative on the day at 2.7110, in what would be the first negative close in three days.

Palladium is trading down again on Tuesday after a brief bounce performed on Monday. The unit remains in a consolidation phase at highs after testing the 1,600 level on July 10 and 11.

Platinum is extending gains above 840.00 on Tuesday following the rally performed on Monday from 830.00 to 847.00.

This article was originally posted on FX Empire