Gold price remains vulnerable amid resilient US yields, US Retail Sales eyed

• Gold price continues its south-side move amid resilient US Dollar and Treasury yields.
• Investors await the US Retail Sales data for July, which is seen expanding with higher momentum.
• An economic slowdown in China improves the appeal of the US Dollar Index as a safe haven.

Gold price (XAU/USD) has remained in bearish territory for more than three weeks due to a resilient US Dollar. The precious metal faces the wrath despite elevated hopes of a steady interest rate decision to be taken by the Federal Reserve (Fed) in its September monetary policy. The context that the Fed will keep interest rates higher for a longer period as US economic resilience and a historically low jobless rate will appear as a difficulty in shredding the “last mile” of inflationary pressures.

As the Fed conveyed in July’s policy meeting that the central bank will be data-dependent from now on, investors will keenly watch the July US Retail Sales data. Consumer spending is seen expanding at a higher momentum as payroll bills expanded at a steady pace in July. After a modest inflationary recovery, higher consumer spending momentum would force Fed policymakers to keep interest rates higher for longer.

Daily Digest Market Movers: Gold price falls ahead of US Retail Sales data

• Gold price looks set to test the round-level support of $1,900.00 amid strength in the US Dollar and US Treasury yields.
• 10-year US Treasury yields jump to 4.22% as investors hope that Federal Reserve policymakers will face difficulties getting the economy to 2% core inflation.
• The US Dollar strengthens as investors lose confidence in China’s economic outlook due to persistent deflation risks.
• An economic slowdown in China improves the appeal of the US Dollar Index (DXY) as a safe haven.
• The US Dollar will remain in the spotlight on Tuesday as the US Census Bureau will report the monthly Retail Sales data for July, which will be published at 12:30 GMT.
• The significance of the US Retail Sales is high as Fed policymakers conveyed in their July monetary policy meeting that further policy action will be data dependent.
• Analysts at TD Securities expect Retail Sales to rise for a fourth consecutive month in July after 0.2%-0.5% MoM gains in Q2. Volatile auto sales will likely add to growth while sales in gas stations might be a minor obstacle. Importantly, the control group is expected to stay firm, with online sales benefiting from Amazon's Prime Day. Sales in bars/restaurants to expand at a brisk pace.”
• In spite of a slower-than-expected jump in US inflation and a decent increase in the Producer Price Index (PPI) for July, the Fed is expected to keep the interest rate policy unchanged in September.
• A moderate increase in US inflation is majorly contributed by higher rentals, which indicates that inflation is confidently returning to 2%.
• No doubt, the Fed is expected to keep policy rates unchanged in September, the context which is hurting the Gold price is the hope that the central bank will keep interest rates elevated for a longer period.
• Atlanta Fed Assistant Vice President and chief inflation watcher Brent Meyer suggests in a new analysis that the road to 2% inflation may in fact be smooth, rather than filled with the setbacks and difficult choices many Fed officials have said they expect.
• In the latest survey of consumer inflation expectations by the New York Fed, inflation one year from now will be at 3.5% vs. an expectation of 3.8% recorded in June.
• On Monday, US Treasury Secretary Janet Yellen said that President Joe Biden's policies are powering historic job growth and rebuilding competitiveness, Reuters reported.
• This week, investors will also focus on the Federal Open Market Committee (FOMC) minutes, which will be released on Wednesday at 18:00 GMT. Investors would look for cues about inflation and the interest rate guidance for the rest of 2023.

Technical Analysis: Gold price tests below the 200-day EMA

Gold price continues its declining spell after failing to sustain above the crucial support of $1,910.00. The precious metal is expected to extend its downside toward the $1,900.00 support amid sheer strength in the US Dollar. The yellow metal tests territory below the 200-day Exponential Moving Average (EMA), followed by a bearish crossover from the 20 and 50-day EMAs. Momentum oscillators indicate the activation of a bearish impulse.