Gold erased its gains after US retail sales underscored the strength of the world’s largest economy, potentially reducing the size of the Federal Reserve’s expected interest-rate cuts next month.
Bullion steadied after initially swinging from a 0.9% gain to a decline of 0.6%, as retail sales exceeded expectations and a separate report showed jobless claims dropping to the lowest since early July. A stronger US economy could persuade the Fed to curb and size and frequency of rate cuts.
Impact of Strong Retail Sales on Gold Prices
The unexpected strength in US retail sales has put pressure on gold prices, as investors reevaluate the possibility of aggressive interest-rate cuts by the Federal Reserve. Gold prices tend to move inversely to interest rates, so a stronger economy could signal lower chances of significant rate cuts, leading to a decrease in demand for the precious metal.
