Can July US Retail Sales "Temporarily Suppress" the Prevalent Bearish Trend in Gold Technicals?

The upcoming release of July's US retail sales data tonight may not be able to reverse the downward trend in gold prices. Market expectations indicate a retail sales growth rate of 0.4% for July, higher than the previous value of 0.2%. Since April this year, US retail sales have shown signs of improvement, reversing the previous negative growth trend.

Several investment banks, including Deutsche Bank, Citigroup, and Credit Suisse, also anticipate a moderate increase in July's US retail sales, with estimated values ranging from 0.4% to 0.5%. If the reported value aligns with expectations, it could further suppress the short-term decline in gold. Conversely, if it falls below expectations, it may potentially support a halt in the short-term decline of gold.

However, some market analysts believe that the current downward pressure on gold prices is primarily due to recent strength in US bond yields and the US dollar. Currently, the yield spread between the US 10-year and 2-year Treasury bonds remains inverted at approximately 73 bps. As the market expects the Fed to pause interest rate hikes in September, it is anticipated that short-term US Treasury bond yields will remain relatively high and exhibit minimal volatility over the next few months. However, as market expectations for a US economic downturn diminish, long-term US Treasury bond yields are expected to continue rising, potentially causing a flattening of the yield curve.

Source：McroMicro

From a technical perspective, gold prices have already fallen to levels seen a month ago and have tested the 200-day MA line twice. If gold prices continue to decline and remain below the 200-day MA line, further declines may be expected. Resistance levels can be found at $1920 and $1930, while support levels exist at $1900 and $1892.

Source: Investing.com

In the coming days, there is relatively little economic data and events that will impact gold market volatility. Investors should pay attention to the minutes of the Fed's monetary policy meeting on Thursday (Aug 17), although the likelihood of causing significant fluctuations in gold is predicted to be minimal.