US retail data unexpectedly strengthened in November, with gold prices still fluctuating in a narrow range around 2040

The slowdown in demand that Powell mentioned was not as rapid as expected, at least in terms of retail sales, which was better than all aggregate data. Initial claims for unemployment benefits were also much lower than expected, and even import prices were not as negative as market forecasts.

The slowdown in demand mentioned by Federal Reserve Chairperson Jerome Powell has not been as rapid as expected, at least in terms of retail sales, and the data is better than all aggregate data. Initial claims for unemployment benefits are also much lower than expected, and even import prices are not as negative as the market forecasts. The data are certainly not as dovish as the market has moved over the past 24 hours.

On Thursday (December 14), the gold market did not react much to the latest data, and in the minutes after the data was released, spot gold continued to move in a narrow range between $2,030 and $2,040, and is now reported at $2038.02/ounce.

(30-Minute chart of spot gold, source:)

"Market participants see the Fed as dovish, focusing on discussions of US rate cuts next year, while the lower interest rate outlook is boosting gold," said Giovanni Stanovo, an analyst at UBS. "We remain bullish on the outlook for gold and aim to reach $2,250 an ounce by the end of 2024."

As the holiday shopping season boomed, U.S. retail sales rose unexpectedly in November, which should keep the economy growing modestly this quarter.

The U.S. Commerce Department's Census Bureau said on Thursday that retail sales rebounded 0.3 percent last month. The October data was revised down to show a 0.2 percent decline in sales, instead of a 0.1 percent decline previously reported. Economists polled by Reuters had forecast retail sales would decline slightly by 0.1 percent.

Retail sales are mainly goods and are not adjusted for inflation. Spending has slowed from its strong pace earlier this year due to higher borrowing costs.

The Federal Reserve kept interest rates steady on Wednesday and said in a new economic forecast that the historic monetary policy tightening of the past two years is over and borrowing costs will fall in 2024.

Excluding cars, petrol, building materials and food services, retail sales rose 0.4 per cent last month. October's figures were revised down to show that growth in these so-called core retail sales, which are most closely linked to the consumer spending component of GDP, remained unchanged, rather than the 0.2 per cent growth previously reported.

Economists expect inflation-adjusted consumer spending to grow at an annualized rate of about 2 percent this quarter, down from 3.6 percent in the third quarter.

The Atlanta Fed forecast GDP growth of 1.2 per cent in the fourth quarter, below the non-inflationary rate that Fed officials believe is around 1.8 per cent. Growth in October-December was also constrained by a widening trade deficit and slowing inventory accumulation.

While growth is cooling, most economists do not expect a recession because the labour market will continue to create jobs at a healthy pace.

Initial jobless claims fell by 19,000 to a seasonally adjusted 202,000 in the week ending Dec. 9, according to a separate report from the Labor Department on Thursday. Economists had forecast 220,000 claims for unemployment benefits in the latest week.

Claims reports show the number of people receiving benefits after an initial week of assistance, a proxy indicator for recruitment, rose by 20,000 to 1.876 million in the week to December 2.

So-called continuing claims for unemployment benefits have mostly increased since mid-September, largely due to difficulties adjusting the data for seasonal fluctuations after an unprecedented surge in claims for benefits in the early days of the COVID-19 pandemic.

"The steady trend in initial jobless claims is a more accurate reflection of current labour market conditions than the sustained surge in claims since the summer," said Lou Crandall, chief economist at Wrightson ICAP in New York.

The rally in gold prices came as the Federal Reserve signalled the end of its rate hike policy and predicted lower borrowing costs in 2024. Seventeen of the 19 Fed officials expected the central bank to cut rates by the end of 2024, after the central bank held rates steady for the third consecutive meeting as widely expected.

The dollar fell to a four-month low, making gold cheaper for non-dollar buyers, while the yield on the benchmark 10-year U.S. Treasury note fell to its lowest level since late July.

Falling U.S. interest rates are putting pressure on the dollar and bond yields, and increasing the attractiveness of non-yielding gold.

According to the CME FedWatch tool, the market currently expects the probability of the Federal Reserve cutting interest rates in March to be around 89%.