Gold steady ahead of U.S. retail sales data

Gold remained fairly unchanged in a calm trading session on Tuesday as market players await the release of U.S. retail sales figures later in the day. Gains were capped by a stronger dollar and after four day of advances began to threaten demand. Silver and platinum hit two-month highs.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1 335.10 per troy ounce at 9:19 GMT, up 0.07% on the day. Prices held in a narrow range between days high at $1 340.70, near yesterdays peak at $1 342.90, the strongest level since July 24, and days low of $1 329.90 an ounce. The precious metal rose 1.4% on Monday, a fourth consecutive daily gain, extending current weeks advance to over 1.6%.

Gold swung between gains and losses in a tight range on Tuesday as market players remained cautions ahead of the upcoming U.S. data, which should give further indication whether Fed will scale back its monetary stimulus in September. July’s Retail Sales are expected to have advanced by 0.3%, compared to a 0.4% jump in the preceding month. If confirmed, this would be a fourth consecutive monthly advance, sighting a consistently recovering U.S. economic activity. Import prices are projected to have outdone the previous period both on annual and monthly basis.

The dollar advanced in expectation for positive readings of this weeks indicators, which, if confirmed, will reinforce the central banks view to taper the Quantitative Easing program by the end of the year. The dollar index, which measures the greenbacks performance against six major trading partners, rose to 81.51 by 9:19 GMT, up 0.11% on the day. The September contract ranged between days high at 81.65, the highest since August 7, and days low of 81.42. The U.S. currency gauge soared 0.35% on Monday and has so far advanced over 0.4% this week.

Dollar-denominated commodities have largely been tracking shifting expectations of an earlier-than-expected tapering of Fed’s monetary easing program, on which the strength of the dollar depends. The greenback trades inversely to dollar-priced raw materials as its strengthening makes commodities more expensive for foreign currency holders and reduces their appeal as an alternative investment.

Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., said for Bloomberg: “The market is consolidating after recent gains, with a stronger dollar weighing on prices. Higher prices may deter fresh investment and physical purchases.”

Gold surged on Monday as assets in the SPDR Gold Trust advanced for the first time since June 10, according to Bloomberg data. Holdings expanded by 1.9 tons to 911.13 tons on August 9 after falling by 439.69 tons, or 33%, through every month this year. Assets remained unchanged on August 11.

Investors will also be closely watching rest of the U.S. data due this week. On Wednesday, producer prices (Producer Price Index) will likely show a slower advance than the preceding period both year-on-year and month-on-month. Thursday’s consumer inflation (CPI) should have advanced by 0.2% compared to June and 2.0% from a year earlier. Industrial Production is expected to have surged 0.3%, marking the same advance as in June. Both of Friday’s Building Permits and Housing Starts are projected to have advanced last month.

Elsewhere on the precious metals market, silver, platinum and palladium also advanced. Silver delivery in September rose to $21.653 an ounce at 9:14 GMT, up 1.48% on the day. Prices ranged between days high at $21.745 per ounce, a two-month high, while days low stood a $21.120 per ounce. Platinum October futures surged to $1 514.05 per troy ounce, marking a 1.03% daily advance. The metal hit a days high of $1 514.65, the highest since June 6, while days low was touched at $1 493.45. Meanwhile, palladium for September delivery traded at $741.00 an ounce, up 0.46% for the day. Prices held in range between $742.60 and $735.80 per troy ounce.