Gold firm as sluggish U.S. data lowers rate hike prospects

Gold edged up on Monday as sluggish U.S. retail sales data on Friday lowered expectations of a near-term interest rate hike by the Federal Reserve.

Spot gold was up about 0.4 percent at $ 1,339.12 an ounce at 0641 GMT. The metal rose as much as 1.3 percent to a high of $ 1,355.80 on Friday, but ended slightly lower on profit-taking.

U.S. gold was up 0.2 percent at $ 1,345.80 an ounce. U.S. retail sales were unexpectedly flat in July as Americans cut back on purchases of clothing and other goods, signalling a moderation in consumer spending that could lessen the expectations of faster economic growth in the third quarter.

“The U.S. macro data is very mixed and expectations of a rate hike are already priced in gold,” said Helen Lau, analyst at Argonaut Securities in Hong Kong.

“The gold supply is coming back, but overall demand is not good. From now, we need more catalyst to drive the investment demand higher in order to offset the supply increase from gold miners.”

The dollar was on the defensive on Monday, weighed down by the U.S. retail sales data. A stronger dollar discourages gold buying by making the metal more expensive in other currencies.

Summer holidays in the Northern hemisphere are also keeping gold in check, with trading thin and range-bound, said Sam Laughlin, precious metals trader with MKS PAMP Group.

“We don’t expect to move too far outside of the $ 1,330- $ 1,360 range over the short term,” Laughlin said.

“Friday’s soft U.S. retail sales and producer prices data may provide some respite for the metal this week, however participants are pulling back their long bets, which is weighing upon rallies,” he added.

Speculators cut their net long positions in COMEX gold and silver futures and options in the week to Aug.9, Commodity Futures Trading Commission (CFTC) data showed on Friday.

Spot gold may bounce up moderately to $ 1,342 per ounce, before retesting a support at $ 1,334, as suggested by its wave pattern and a Fibonacci projection analysis, Reuters technical analyst Wang Tao said.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.22 percent to 960.45 tonnes on Friday from Thursday.

Silver was up 0.6 percent at $ 19.82 an ounce.

Platinum and palladium were up 1 at $ 1,126.80 and $ 691, respectively. Both hit their lowest in more than two weeks on Friday.