Gold Steady as US Retail Sales Weak

Another quiet night overnight for precious metals, with gold trading in a relatively narrow range, between USD $1288oz and USD $1299, as markets balanced dovish noises from the Bundesbank re European interest rates, and a weaker than expected US retail sales print.

In Europe, it wasn’t just the Bundesbank that was in the news for stating that they were willing to cut interest rates further, including their willingness to see negative deposit rates if necessary.

German Finance Minister Wolfgang Schauble was also in the news, suggesting that their was almost ‘excessive confidence’ in financial markets, and that market liquidity was pointing to new bubbles.

Economic sentiment surveys in Europe were very disappointing, with the ZEW European Economic Sentiment results falling 6 points, whilst the German figures plunged by over 10 points, not good considering Germanys importance the overall health of the continent.

In the USA, whilst business optimism continued rising (gradually), the bigger news was the major miss to retail sales, which rose only 0.1% for the month, and was completely flat ex auto’s.

Off the back of Q1 GDP figures which suggested the US economy has effectively stalled, and the latest sets of job figures which showed that whilst more jobs were created, there is minimal growth in real incomes, the weak retail print is another bad sign of potentially negative momentum building in the US economy

Back to Gold and its looking like USD $1300oz is shaping up as a key pivot point for the market, with a range of moving averages converging around this price point in the coming weeks, especially if prices stay around this level for that time.

With that in mind, its not hard to see why many shorter term traders would be focusing on other markets right now. For long term holders, buying in tranches continues to have merit, for there is still a 50/50 chance this period of relative tranquillity breaks to the downside