Gold prices faced early pressure on Thursday following robust U.S. retail sales data that trounced Wall Street expectations and a decrease for the second straight week in initial unemployment claims.
The yellow metal spent much of the morning whipsawing between notching and then surrendering modest gains as traders digested the better-than-expected data.
Gold – which also felt the squeeze from a recovering dollar and stronger Treasury yields – was up $5.31 at $2,454 per ounce Thursday morning. Silver, meanwhile, had a stronger pivot off the upbeat financial and labor market news, trading up $0.85 at $28.50 per ounce – a gain of more than 3%.
Data from the U.S. Census Bureau drove the bulk of the conversation Thursday morning, as its report showed U.S. retail sales increased 1% last month – shattering Wall Street expectations of a far more modest increase of just 0.3% – and were up 2.7% year over year.
Adding to the mix, the Department of Labor reported on Thursday a drop by 7,000 in initial unemployment claims – from 234,000 on Aug. 3 to 227,000 for the week ending Aug. 10. The data also found that the advance seasonally adjusted insured unemployment rate was 1.2% for the week ending Aug. 3, unchanged from the previous week's unrevised rate.
The surprise leap in retail sales – coupled with Wednesday's Consumer Price Index showing a 2.9% inflation rate, the smallest 12-month increase since 2021 – all but shuts the door for the Fed to make a more aggressive interest rate cut in September.
The market originally priced in chances of a 50 basis-point cut, but after this week's string of economic data, roughly 73% of investors now estimate a cut of 25 basis points, according to the CME FedWatch Tool.
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