Gold Prices Rebound as Retail Sales Miss and Oil Prices Rise
Spot gold and silver prices are higher in early U.S. trading on Friday after retail sales unexpectedly fell, reinforcing market views that the Federal Reserve is closer to holding rates steady in September.
The July retail sales report showed a 0.6% decline, against expectations for a 0.1% increase, while sales excluding autos dropped by 0.3%. This follows Wednesday's cooler CPI report and Thursday's flat headline PPI print, leaving the market-implied probability of a 25-basis-point September rate hike near 32-33%, down from nearly 50% a week ago.
The softer consumer data is supportive for gold through the rates channel, but higher oil prices are capping the move. Brent crude is trading near $88.50 a barrel and U.S. crude is near $82.80, keeping energy risk in the Fed debate even as inflation and spending data weaken the case for another hike.
The Strait of Hormuz remains a key geopolitical channel into oil, inflation expectations, and defensive demand. Washington has signaled new economic-isolation measures against Iran while saying the U.S. blockade can be sustained indefinitely.