PRECIOUS-Gold Accelerates Decline As Dollar Bounces On Higher US Retail Sales
* Palladium sole gain, up more than 2%
* Silver sees biggest daily drop since February
* Strong retail data reinforces tapered narrative – analyst (add comment, chart; update prices)
September 16 (Reuters) – Gold slipped nearly 3% on Thursday and silver fell 5% as strong US retail sales data boosted the dollar and gave betting more ammunition that the Federal Reserve could accelerate its reduction.
Spot gold slipped 2.2% to $ 1,753.58 an ounce at 11:45 am EDT (3:45 pm GMT), after hitting a more than one month low at $ 1,744.30. US gold futures fell 2.3% to $ 1,753.90.
Caught in the wake of gold, silver last lost 4.5% to $ 22.74.
Hammering gold’s appeal to holders of other currencies, the dollar surged after data showed an unexpected increase in US retail sales in August.
“Gold has taken a pretty hard hit,” with the dollar and Treasury yields rising and the data stronger, “you have a long way to go for the exit,” said Bob Haberkorn, senior market strategist at RJO Futures .
Barring a geopolitical event or a surprise from the Fed, the trajectory of gold is unlikely to change before the FOMC meeting, Haberkorn added.
Gold also found little respite from the sluggish labor market, with initial jobless claims slightly higher than expected last week.
Better-than-expected numbers show that “consumer sentiment is starting to pick up, a good indicator for the Fed to meet these expectations in the next rate hike,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
Attention now turns to the Fed’s September 21-22 meeting.
“There are a lot of FOMC members in favor of starting the cut this year, so the outlook for gold is not positive,” said Peter Fertig, analyst at Quantitative Commodity Research.
The unwinding of the economic support measures not only weakens gold’s status as a safe haven – browned by the pandemic – but a subsequent rise in interest rates translates into an increase in the opportunity cost of holding non-productive assets such as bullion.
Platinum fell 1.6% to $ 932.36 an ounce, while palladium was the lone winner, up 2.2% to $ 2,047.24.
Reporting by Arundhati Sarkar and Arpan Varghese, additional reporting by Ashitha Shivaprasad in Bengaluru; Editing by Aditya Soni