Gold regains $2,000 level after U.S. retail slump

Gold prices rebounded on Thursday after weaker-than-expected U.S. retail sales data pushed the dollar and Treasury yields lower. The shift in market sentiment gave bullion bulls reason to cheer, with spot gold (XAU/USD) climbing back above the psychologically important $2,000 level.

The precious metal hit an intraday peak of $2,008.18 per ounce before retreating slightly. At the time of writing gold was still clinging onto the $2,000 support level amid choppy trade. Its next move will likely hinge on Friday’s producer price index (PPI) release, which could provide further clues on the U.S. inflation and rate hike outlook.

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Earlier data showed retail sales dropping more than forecast in January, while jobless claims also eased. That prompted the dollar index to extend its pullback and 10-year Treasury yields to slip – both supportive factors for non-yielding gold. Prices had sunk 1.4% on Tuesday following a surprise jump in U.S. consumer prices.

Markets are now looking for more guidance from Fed officials. Traders have bet that rates will remain on hold until June after the latest inflation data. Vice Chair Michael Barr cautioned that disinflation could be “bumpy” while Chicago Fed chief Austan Goolsbee warned against delaying cuts too long.