Gold continues to slide despite inflation anxiety

Yellow metal pressured by rising US yields and surprise retail figures

Gold continued to trade down on Monday, having closed the previous week down following a rise in US Treasury yields and a surprise increase in American retail sales. 

Retail sales in the world’s largest economy jumped by 0.7% in September, far higher than the 0.2% that economists polled by The Wall Street Journal had forecast. 

However, sales across the majority of leading categories rose. Although auto dealers also saw an increase in sales, this was dampened by the long-running global shortage of semiconductor chips. Indeed, core sales, which excludes auto sales, rose by 0.7%, instead of the 0.5% predicted. 

Americans tighten purse strings?

Analyst estimates were largely based on the view that the spending of the average American would tighten following the dissipation of Covid-19 stimulus cheques and the runaway rate of inflation. 

This week, the US Bureau of Labor Statistics reported a surprise rebound in US consumer prices for the month of September and a rise in producer prices to 30-year highs. 

Inflation anxiety had propelled spot gold, a traditional safe haven and hedge, above $1,800 per troy ounce for the first time in a month. 

The yellow metal was unable to maintain this momentum, however, and headed even lower following Friday’s retail figures. 

US Treasury yield

By mid-morning, the 10-year US Treasury yield stood three basis points higher at 1.611%, within touching distance of a four-month high. 

Spot gold traded down by 0.2% at $1,763 per troy ounce, having slumped by 1.5% in the immediate aftermath of Friday’s retail figures. 

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