Price of Gold Fundamental Daily Forecast – Retail Sales, Fed’s Powell Could Offer Insight into Interest Rate Decision

Gold futures are edging higher on Tuesday shortly before the regular session opening. A third day of spiraling price action suggests investor indecision and impending volatility. Steady to sideways Treasury yields and U.S. Dollar Index are influencing the price action. Underpinning prices is the widely expected Federal Reserve interest rate cut for late July. Putting a lid on the market is the uncertainty surrounding a 50-basis point rate cut.

At 11:42 GMT, August Comex gold is trading $1416.40, up $2.90 or +0.20%.

The current price action suggests that investors have turned neutral on gold at this time. Money is flowing into equity markets, which indicates a relative calm. Gold traders don’t seem to be bothered by problems over Brexit, the lingering trade dispute between the United States and China, or the minor skirmishes in the Middle East.

Daily Forecast

The focus today is likely to be on U.S. economic reports and speeches from two Fed officials. With the chances of a 25-basis point rate cut at 100%, traders will be looking to see if the economic data or the Fed speakers signal the need for a more aggressive 50-basis point rate cut.

The major reports today are Core Retail Sales and Retail Sales. Core Retail Sales are expected to come in at 0.1%, down from the previously reported 0.5%. Retail Sales are said to have increased 0.1%, also down from 0.5%.

This report is important because retail sales mean consumer spending, and consumers are helping to hold the economy together. Weaker retail numbers will support the need for a 25-basis point rate cut, but a huge miss will revive the odds of an even bigger rate cut.

Minor reports include import prices, capacity utilization rate, industrial production, business inventories and NAHB housing market index. Industrial Production is expected to post the biggest change, falling from a 0.4% gain to only a 0.1% increase.

Fed Chair Powell is expected to speak at 17:00 GMT. As with any speech from the Fed chief, traders will be looking for clues that offer investors insight into Fed policy and the factors that will influence the central bank’s decision on interest rates.