Gold Propels; Dollar Drops After US Retail Sales Disappoint

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Retail Sales Talking Points:

  • Gold lifts higher on downbeat retail sales data; with the headline figure printing -0.3%, vs expectations of +0.3%
  • USD price action wilts on increased FOMC rate cut odds
  • Retail Sales Ex Auto declined 0.1% vs a 0.2% gain expected

US Consumers reigned in their spending for the month of September as retail sales data printed a disappointing -0.3% vs expectations of 0.3%, although August was revised up from 0.4% to 0.6%. The figure is closely watched by market participants and economist to gauge the strength of the US consumer. Gold was propelled higher on the report and briefly breached 1491.00 before giving back some gains to 1485.59 at the time of writing.

XAUUSD (5-Min Chart)

With that being said, the Federal Reserve has been keeping a close eye on the health of the US consumer as they are the primary force that drives the US economy. The miss on retail sales bolstered odds of another Fed rate cut indicated by pricing in overnight swaps which put an 85.3% probability for a rate cut at this month’s FOMC meeting – up from 72.8% yesterday.

Gold Propels; Dollar Drops After US Retail Sales Disappoint

Volatility in the US Dollar also picked up as the DXY index dropped to 98.18 immediately following the report crossing the wires, although the reaction is not as strong compared to gold’s move. The weakness is likely reflective of the increased odds of a rate cut being priced into the market.

DXY Index (5-Min Chart)

DXY 5-Min Chart

–Written by Thomas Westwater, Intern Analyst for DailyFX.com Contact and

follow Thomas on Twitter @FxWestwater

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