Weaker US retail sales and consumer sentiment data reduce bets on a near-term Fed rate increase, pressuring the USD and supporting XAU.
Gold (XAU/USD) extended gains early Monday, trading near $4,400 after retreating from a one-week low of $4,300 on Friday. The metal remains below its June 5 high despite tailwinds from a softer US Dollar (USD).
US Retail Sales fell 0.6% in July, the first decline in nine months and the steepest since May 2023. The University of Michigan’s Consumer Sentiment Index also dropped to 51 in August from 55.2 in July, reinforcing signs of cooling inflation and reducing expectations for a Federal Reserve rate hike.
However, concerns over volatile energy prices and geopolitical tensions, including US-Iran tensions, may limit further upside for gold. Treasury Secretary Scott Bessent indicated new economic measures against Iran could be announced this week, supporting the safe-haven USD.