The gold price jumped on Friday (July 14), and was on track for its biggest weekly gain since mid-May. Flat US inflation data and weaker-than-expected retail sales eased worries aboutanother interest rate increase later this year.
The downside surprise in inflation and retail sales data was not good news for the dollar index and investors have pushed their bearish bets further, said Think Markets analyst Naeem Aslam. Gold is the net beneficiary of this data as investors factor in the impact of the rate hiking cycle.
Last month, the US Federal Reserve increased interest rates for the second time in 2017. But the economic data released on Friday may be viewed as providing insufficient support for the Fed to hike rates when policymakers meet again in September.
On Wednesday, Fed Chair Janet Yellen said in congressional testimony that the Fed will need to keep gradually raising US interest rates in the coming years, but not to levels seen in previous cycles.
The main takeaway for gold investors should be Yellen’s continuous focus on ‘gradual’ rate hikes and balance sheet reductions, and this could be interpreted as fewer rate hikes with more time in between hikes than originally expected, Nico Pantelis, head of research at Secular Investor, told MarketWatch.
That could be good news for gold, which tends to fare better when interest rates are low and often struggles when interest rates increase. That’s because higher rates curb the investment appeal of non-interest-bearing assets like gold.
A weaker US dollar also supported gold, as a softer greenback makes commodities priced in dollars cheaper for buyers using weaker currencies. As of 1:00 p.m. EST on Friday, the gold price was changing hands at $1,228.46 per ounce.
Click here to read more about gold’sprice performance in Q2 and what’s ahead for the yellow metal.
Looking over to silver, the white metal was on track for a2.5-percent gain on Friday, itsbiggest one-day risesince mid-March. As of 1:00 p.m. EST on Friday, the white metal was at $15.95 per ounce.Click here to read more about the silver price performance in Q2.
Lastly, spot oil rose on Friday after reports pointed to higher demand andsupply concerns in Nigeria. August West Texas Intermediate crude rose 24 cents, or 0.5 percent, to $46.32 a barrel on the New York Mercantile Exchange, while Brent crude for September delivery on London’s ICE Futures exchange climbed 26 cents, or 0.5 percent, to $48.68 a barrel.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
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The post Weekly Round-Up: Gold Price Climbs on Weak US Economic Data appeared first on Investing News Network.