Gold price consolidates as decline in consumer spending growth fails to rebuff hawkish Fed bets

• Gold price has turned sideways around $1,980.00 as investors are awaiting a fresh trigger.
• The US Dollar Index sustains confidently above 100.00 despite an absence of supportive fundamentals.
• US Retail Sales for June showed a slowdown in consumer spending momentum.

Gold price (XAU/USD) is demonstrating a non-directional performance on Wednesday after printing a fresh seven-month high above $1,980.00. The precious metal witnessed immense strength on Tuesday after US Retail Sales for June showed that consumer spending momentum has slowed down but is still sufficient to push the Federal Reserve (Fed) to raise interest rates further at its July 26 FOMC meeting.

Inflationary pressures in the United States are slowing down as the recruitment process by firms is increasing at a snail’s pace. US firms are facing the wrath of higher interest rates by the Fed and tight credit conditions by regional banks. New filters have been added to the credit distribution process by commercial banks to maintain asset quality in a turbulent environment.

Daily Digest Market Movers: Gold remains sideways as investors await a key trigger

• Gold price has remained lackluster around $1,980.00 as monthly Retail Sales data for June remained below expectations.
• US Retail Sales expanded nominally by 0.2% vs. the estimates of 0.5% and the former release of 0.3%. Also, the economic indicator excluding automobiles landed at 0.2%, lower than the consensus and prior release of 0.3%.
• Scrutiny of the US Retail Sales report indicates that momentum in consumer spending growth has slowed but is still resilient. Sales at service stations and building home materials remained subdued.
• US economic indicators for June posted so far convey that inflation has slowed down significantly and that labor market conditions have also eased.
• In addition to soft inflation and a loosening employment market, weak momentum in consumer spending indicates that overall inflationary pressures are lessening.
• Apart from soft inflationary pressures in the US economy, price pressures in the Eurozone and the United Kingdom are also losing persistence.
• In spite of softening inflationary pressures, the Federal Reserve is expected to resume its policy-tightening spell next week.
• Investors should note that Fed chair Jerome Powell skipped hiking interest rates in June after a 13-month long rate-hiking spree.
• US Treasury Secretary Janet Yellen said on Tuesday that a fading recruitment process by firms is prompting the disinflationary process.
• Investors anticipate that the Fed would manage to announce victory over sticky inflation without pushing economy into a recession.
• As per the CME Group’s FedWatch tool, only one more interest rate hike will be announced from the Fed by year-end.
• Contrary to market expectations, the Fed is consistently reiterating that two more interest rate hikes are appropriate.
• Meanwhile, the impact of the announcement of a new gold-backed currency by the BRICS (Brazil, Russia, India, China, and South Africa) is fading away.
• The US Dollar Index (DXY) is making efforts for stabilization above the psychological support of 100.00 as momentum oscillators have turned oversold.
• Contrary to the USD index, 10-year US Treasury yields have dropped further to near 3.75% amid an upbeat market mood.

Technical Analysis: Gold price auctions around $1,980.00

Gold price has turned quiet after printing a fresh seven-week high at $1,984.25 on Tuesday. The precious metal has rebounded after testing the 20-day Exponential Moving Average (EMA) at $1.947.28. Momentum oscillators indicate that sheer strength in the upside bias. The yellow metal is approaching the psychological resistance of $2,000.00.