Insights 
VT 
Gold prices have risen as traders evaluate mixed US retail sales data and uncertainty in the Middle East. XAU/USD is trading around $3,392, driven by demand amid geopolitical risks.
US retail sales data showed a 0.9% decline in May, exceeding the forecasted 0.7% drop, the largest since early 2024. Sales excluding autos fell by 0.3%, while the control group increased by 0.4%, indicating resilient consumer spending.
Complex Federal Reserve Outlook
The Federal Reserve faces a complex policy outlook with mixed data. Weaker figures may support rate cuts, while the strong control group results might delay monetary easing.
Tensions between Israel and Iran are also boosting gold prices, with missile and drone report raising fears of regional conflict. Concerns over the Strait of Hormuz, a key oil route, increase demand for gold due to potential disruptions.
Key considerations for gold include the Israel-Iran conflict’s impact on oil supply and inflation. The Fed’s Summary of Economic Projections may reveal rate cut expectations amid inflation risks.
Technically, gold consolidates above the $3,375–$3,380 support with a cap at $3,408. A break could retest monthly highs, while failing to hold $3,371 may lead to deeper retracement. Traders keep an eye on economic indicators, geopolitical events, and financial policies as they manage market complexities.
Gold prices have found steady footing as broader uncertainty continues to colour financial markets. Much of the recent traction in spot prices has stemmed from soft economic figures in the United States and heightened geopolitical jitters emanating from the Middle East. The price oscillates around the $3,392 level, a zone that has drawn robust interest as investors weigh both inflation paths and global risk premiums.
May’s retail sales print from the US landed well below expectations, pointing to a 0.9% decline. That figure marked the steepest monthly drop in nearly half a year. Surprisingly though, while motor vehicle sales dragged on the headline reading, the control group—which feeds directly into GDP calculations—continued higher, up 0.4%. This suggests that beneath the surface, consumers are still propping up the economy, albeit with less conviction than earlier in the year.
Geopolitical Tensions and Economic Impact
From our perspective, this dual message has left policymakers navigating a narrow channel. If headline activity continues to drop, it would offer justification for policy easing. That said, the resilience in core spending blurs the signal and may stall any appetite for immediate rate adjustments. Decision-makers now face a delicate balancing act between encouraging softening demand to reduce inflation and avoiding unnecessary harm to what remains of consumer momentum.
Geopolitical events thousands of miles away have only sharpened this calculation. Reports of drone and missile exchanges, particularly between Israel and Iran, have revived fears of further instability in the Gulf region. Any risk to the Strait of Hormuz—a route responsible for a sizeable portion of global oil transit—has direct implications for energy prices. As oil markets react, inflation expectations are forced upward, reinforcing gold’s appeal as a hedge against further cost pressures.
We continue to monitor this corridor closely. Oil disruptions flowing from regional tension often create lagged effects in headline inflation elsewhere. That sort of scenario would make it harder for fiscal authorities to justify easing rates, especially if price growth proves sticky in the months ahead. These tensions don’t just elevate volatility; they directly influence policy timelines, risk appetite, and ultimately, asset re-pricing.
From a technical point of view, the yellow metal is showing a tendency to consolidate just above key intermediate support near the $3,375–$3,380 range. Immediate resistance has repeatedly held just beyond $3,408, suggesting traders are wary of pushing positions until either data surprises or conflict escalations offer fresh direction. A sustained breach above resistance could lead prices back towards monthly highs, triggering momentum-based strategies. On the flip side, a break below $3,371 would risk a deeper pullback, particularly if data surprises to the upside and tempers policy shift expectations.
As we approach the release of the Fed’s Summary of Economic Projections, we expect the rate path to be one of the most closely parsed elements. This document may well clarify the weight policymakers assign to persistent core inflation versus recent signs of slowing top-line growth. For those of us active in derivatives, short-term positioning will hinge not just on the message, but also on the market’s perception of the Fed’s willingness to tolerate diverging data.
In the near term, the path forward remains highly sensitive to both fiscal sentiment and external catalysts. With powerful crosscurrents in place, it becomes increasingly important to fine-tune exposures, watching for asymmetric risks at play.
