Gold extended a two-week advance Friday, trading at $4,386 per troy ounce after gaining nearly 0.90 percent as the U.S. Dollar Index dropped 0.4 percent to 99.57. The dollar's retreat followed a week of softening economic data that stripped away much of the market's conviction that the Federal Reserve would raise rates in September.
The trigger Friday was a July retail sales report from the U.S. Commerce Department showing a 0.6 percent decline against consensus expectations for a 0.1 percent expansion. The miss ended a five-month consecutive streak of retail sales growth. The Control Group subset, which feeds directly into the consumer spending calculation inside GDP, fell 0.4 percent after a 0.4 percent gain in June.
The retail data landed on top of an already deteriorating economic picture built across the week. Producer-side and consumer-side inflation both eased in July. Initial jobless claims rose modestly. Each data point individually was manageable; together they reset the market's read on the Fed's path.
The repricing in rate expectations was sharp. Swaps markets assigned a 31 percent probability to a rate hike at the September Federal Open Market Committee meeting, according to Prime Terminal data — down from roughly 55 percent the prior week. That 24-percentage-point collapse in five trading sessions is the mechanism behind Friday's gold move: lower hike odds mean a weaker dollar and lower Treasury yields, both of which reduce the opportunity cost of holding a non-yielding asset like bullion.
U.S. 10-year Treasury yields rose 3.5 basis points on the day to 4.684 percent, a modest intraday gain that did not offset the week's broader yield decline. The persistence of yield pressure — rather than a single day's tick — sustained gold's upward trend across the full two-week advance.
Consumer sentiment data added to the week's weight. The University of Michigan's preliminary Aug. Consumer Sentiment reading fell to 51.0 from 55.2 in July. One-year inflation expectations within that survey edged up from 4.2 percent to 4.3 percent. Five-year expectations held at 3.3 percent. The divergence between the headline sentiment drop and the relatively anchored long-run inflation expectations matters for Fed signaling: a central bank watching whether long-run expectations drift higher can point to 3.3 percent stability as cover for holding rates, even as the economy softens.
Geopolitical developments provided a secondary layer of support. Treasury Secretary Scott Bessent said the administration plans to implement rare measures against Iran. The Strait of Hormuz remained closed as of Friday. Oil prices did not mount a sharp rally despite the closure, which limited the inflation-from-energy channel that would otherwise complicate the Fed's calculus. Gold retained a safe-haven bid from the unresolved situation even without new headline escalation.
The $4,400 level remains the line gold has not cleared. Buyers tested it during Friday's session but could not close above it. The 100-day simple moving average sits at $4,386, precisely where gold settled. That convergence of price and moving average typically invites consolidation rather than a clean directional break.
The technical structure sets up a defined test for next week. A close above $4,400 exposes $4,450 and then the 200-day simple moving average at $4,504. On the downside, Friday's intraday low at $4,311 is the first support, followed by $4,300. A break of $4,300 opens a path toward the July 6 high at $4,202, then the 50-day simple moving average at $4,146 and the $4,100 level.
The counterargument to the current gold thesis is not trivial. Swaps markets still assign a 31 percent probability to a September hike — that is not zero. One-year consumer inflation expectations rose this week. If next week's data — which includes housing figures, the ADP Employment Change four-week average, weekly jobless claims and flash purchasing managers' index readings — surprises to the upside, the dollar could recover and hike odds could reprice back toward 50 percent quickly. That reversal would pressure gold toward its support levels within days.
The Relative Strength Index remains in bullish territory according to Friday's readings. Momentum indicators alone do not override a data shock in either direction, and next week's employment and activity data carry enough weight to reopen the September debate before the Fed's meeting calendar forces a decision.
