Forexpros – Gold futures retraced losses to trade flat during U.S. afternoon hours Monday, as the release of disappointing U.S. retail sales data triggered hopes for a third round of monetary easing by the Federal Reserve.
Gold traders also looked ahead to Federal Reserve Chairman Ben Bernanke’s semi-annual testimony to the U.S. Congress on Tuesday and Wednesday, amid ongoing speculation over whether the central bank will introduce more easing measures to stimulate the economy.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,592.61 a troy ounce during U.S. afternoon trade, flat on the session.
It earlier fell by as much as 0.9% to trade at a session low of USD1,577.95 a troy ounce.
Gold futures were likely to find support at USD1,554.55 a troy ounce, the low from July 12 and near-term resistance at USD1,601.25, the high from July 10.
Gold futures trimmed losses after the Commerce Department said retail sales fell by a seasonally adjusted 0.5% in June, confounding expectations for a 0.2% increase, after a 0.2% drop in May.
It was the first time retail sales had dropped in three consecutive months since late 2008.
Core retail sales, which exclude automobile sales, declined for the second consecutive month, dropping 0.4%, against expectations for an increase of 0.1%, after falling by 0.4% in May.
The data fuelled speculation for another round of easing from the Federal Reserve, ahead of Fed Chairman Ben Bernanke’s testimony on the economic outlook to the U.S. Senate on Tuesday and Wednesday.
Minutes of the Fed’s June policy-setting meeting released last week revealed that only a few board members thought that more asset purchases would be necessary.
Several other officials indicated that more action could be warranted only if growth slows, risks intensified or if inflation seemed likely to fall “persistently” below their goal.
Just four Fed officials mentioned more quantitative easing in their individual forecasts, two saying they supported more easing and two saying they would consider it.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 12% since late February, as the Fed failed to deliver more easing and amid concerns over the euro zone’s deepening debt crisis, which has fueled demand for the precious metal’s hedge, the greenback.
Elsewhere on the Comex, silver for September delivery dipped 0.2% to trade at USD27.31 a troy ounce, while copper for September delivery dropped 0.5% to trade at USD3.485 a pound.
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