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The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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US Retail Sales Dominate the Market as Golden Bulls Await

After last week's US inflation data, investors will be focused on the US July retail sales data and the latest FOMC meeting minutes scheduled for release on Wednesday. In terms of impact, the upcoming data releases are known as "terrorist data" by market participants. The reason for this title is that the market tends to fluctuate significantly after the release of the data, especially the price of gold. Because the retail sales data often significantly impact the US stock market, investors use gold, a renowned safe-haven asset, as a hedge against the stock market volatility despite gold prices fluctuating sharply.

The market expects the latest US retail sales to increase by 0.1% month-on-month, a significant slowdown from the previous month’s 1% growth rate; core retail sales may record negative growth. However, core retail sales are closely related to the consumer spending component of gross domestic product (GDP), so the data is more likely to reflect the US economy's current state accurately.

If the retail sales figures show a softening in inflation-adjusted core retail sales, consumer spending may have slowed down or even slipped in the third quarter. However, as more US consumption shifts from goods to services, economists expect a modest increase in consumption rather than a contraction.

The retail sales data is an essential measure of the overall consumer spending in the United States. It is also one of the data points contributing a significant proportion of GDP in the United States. The retail sales data also reflects consumers' confidence in the country’s economic outlook. Therefore, weak retail sales data means that consumers are worried about the economic outlook, which is negative. As a result, the US GDP contracted again in the second quarter and may fall further in Q3, dragging down the US dollar, with the US stock market also under pressure.

Suppose the latest retail sales data is lower than expected and records negative growth. Investors will further adjust their bets on the Fed, raising interest rates by 75 basis points in September, especially after the US inflation cooled off significantly in July. The market is waiting for more economic data to measure the prospect of future interest rate hikes from the Fed.

Considering that the retail sales data unexpectedly recorded positive growth in June, boosting investors' optimism after the release. However, some investors are concerned that this week’s data will exceed expectations again. The market is apprehensive about how the gold price will react to the data.

After the retail sales data is released, the market will shift its focus to the guidelines set out in the latest Fed policy meeting minutes. The Fed raised interest rates by 75 basis points at its last meeting. The market hopes to glean more about the Fed’s plans and signals from the upcoming meeting minutes.

Suppose the Fed continues to show its determination to fight inflation in the latest minutes; regardless if the economy slows down further, it could still raise interest rates as planned. However, the new information that the minutes can reveal is expected to be limited, and it is unlikely that gold prices will find significant guidance from it.

Gold tested $1,800 last week but failed to break through. If this week's retail sales data show a slowdown, the price of gold will seek to rechallenge the $1,800 mark. If gold can break through, it will be regarded as a critical upside signal, which will help consolidate gold prices. The rebound will keep going; otherwise, watch out for a possible return to the $1780-1760 consolidation zone.

Last Updated: 15/08/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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