Gold Shines Amid Economic Signals: Retail Sales Boost and Rate Hike Hopes

Gold prices pared some of its gains after strong US retail sales data. It hit a high of $2724  and currently trading around $2704.84.

Strong Retail Sales Signal Consumer Confidence

As of January 17, 2025, U.S. retail sales performed well for December 2024, with a 0.4% increase following the revised 0.8% increase in November. The value of total retail sales for December was about $729.2 billion, an increase of 3.9% from December 2023. Core retail sales, which exclude cars and gasoline, increased by 0.7%, showing high demand. Even though inflation has been a major economic challenge, consumers are still spending, especially during the holiday season. Looking ahead, economists are more cautiously optimistic with 2025 in view; a strong jobs market and buoyant consumer confidence might continue supporting retail activity.

Rate Pause Sentiments Climb

According to the CME Fed Watch tool, the chances of a rate pause have increased to 97.30% up from 96.80% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding above short-term moving averages 34 EMA and 55 EMA and long-term moving averages (200 EMA) in the 4 hour chart. Immediate support is at $2,670, and a break below this level will drag the yellow metal  $2660/$2650/$2,630,$2600/ $2,570, $2,559, $2,536, and eventually $2,500. The near-term resistance is at $2710, with potential price targets at $2725/ $2,750-/$2775. It is good to buy on dips around $2680, with a stop-loss at $2,640 for a target price of $2,775/$2790.