Gold rose 0.5% to $4,374.30 an ounce on Friday, putting bullion on track for a 0.7% weekly gain after soft U.S. inflation and retail sales data cut the odds of a September Federal Reserve rate hike. A rally in oil prices tied to the U.S.-Iran standoff over the Strait of Hormuz capped the advance.
Gold climbed 0.5% to $4,374.30 an ounce at 16:29 ET, while gold futures added 0.2% to $4,430.05 an ounce. Both contracts were up 0.7% for the week.
Rate-hike odds keep falling
Weaker U.S. retail sales drove the latest move. The Census Bureau said July retail sales fell 0.6% month over month to $763.6 billion, against a consensus estimate for a 0.1% rise, while core retail sales decreased 0.3% versus a forecast of 0.2%. That followed a Wednesday consumer price index and Thursday producer price index that both showed a deceleration in annual inflation figures for July.
As a result, CME FedWatch odds of the Fed holding rates steady in September rose to about 67% from nearly 56% a week earlier, while the probability of a quarter-point hike fell to almost 33% from around 44%. Lower rate hike expectations tend to boost non-yielding assets such as gold.
The University of Michigan added to the picture, reporting that consumer sentiment slipped to 51 in August from 55.2 in July, ending two straight months of improvement. Year-ahead inflation expectations ticked up to 4.3% from 4.2%.
Oil rally and a resistance wall cap the gain
Gains were limited by a jump in crude tied to the standoff between Washington and Tehran over the Strait of Hormuz, with both sides asserting authority over the waterway and tanker traffic reduced to a trickle. Brent crude futures rose 1.5% to $88.40 a barrel, adding 5.9% for the week.
Separately, gold has struggled to clear the $4,500 handle this week. December COMEX futures ran to an intraday high of $4,509.10 on Thursday before settling at $4,420.40, down 1.1% on the day. The pattern points to persistent selling from holders who bought at higher levels each time the metal approaches that level.
Sources: Investing.com, Investing.com Analysis
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