Global markets were whipsawed last week after U.S. wage data spurred investors to reappraise the outlook for global inflation and weigh consequences for monetary policy and asset valuations. While investors often seek gold as a haven during times of turmoil, the metal fell on the same concerns that helped spark the selloff in stocks: the prospect of higher interest rates. Bullion regained some ground early this week.

The retail sales number “is one of the moving gears that can cause the Fed to actually take a step back from raising interest rates,” Daniel Pavilonis, a senior market strategist at RJO Futures, said in a telephone interview. “There’s a lot of uncertainty in the market and it’s helping gold. Traders are asking, is this number problematic enough to hold off on raising rates, or it is just temporary?”

Eoin Treacy's view

Gold has been ranging mostly below $1350 since the middle of 2016 in another of a succession of 18-month ranges seen over the last 15 years. Gold is a hedge against financial troubles that reduce investors’ purchasing power so if there is any chance that the Fed will fall behind the curve of rising inflation, gold can be seen as a sound hedge.

Today’s clear upward dynamic confirms a near-term low and a break above $1350 would signal a return to medium-term demand dominance. A point I have raised in the Subscriber’s Audio on multiple occasions over the last month is one of the primary reasons people were so eager to buy gold during the commodity boom was that it tended to have explosive breakouts from lengthy ranges. That is reason to pay particular attention to the price as it comes back up towards the upper side of this lengthy medium-term range.

The VanEck Vectors Gold Miners ETF is rallying from the lower side of a well-defined yearlong range.

Meanwhile the VanEck Vectors Junior Gold Miners ETF has a similar pattern to silver and has yet to conclusively break its downward bias.