Gold corrects lower after US Retail Sales data.

Gold price falls after the release of US Retail Sales data for August.
Traders now await the key Fed policy decision with probabilities favoring a larger 0.50% cut to interest rates.
Such a move would boost the attractiveness of Gold.
Analysts call a 10-year secular bull trend starting for commodities, including Gold.

Gold (XAU/USD) pulls back to the $2,570s after US Retail Sales data for August on Tuesday – the last major US macroeconomic data release before the Federal Reserve (Fed) makes its decision on Wednesday.

US Retail Sales rose by 0.1% in August month-on-month, compared to the revised-up 1.1% rise registered in July. This was, however, above consensus expectations of a 0.2% decline, according to data from the US Census Bureau.

US Retail Sales ex Autos, meanwhile, rose by 0.1% after a 0.4% increase in July. This was below estimates of a 0.2% rise.

The data slightly reduced the probabilities of the Federal Reserve (Fed) cutting interest rates by a larger 0.50% on Wednesday, weighing marginally on Gold. Prior to the release the probabilities stood at 67%, after the data they had changed to 65%, according to the CME FedWatch tool.

Gold surges as bets increase the Fed will double cut

Gold shot to an all-time-high (ATH) of $2,589 on Monday after market bets that the Fed will make a double-dose 0.50% cut to interest rates at its meeting on Wednesday rose sharply, according to market-based gauges.

The expectation that the Fed will slash interest rates is positive for Gold because it lowers the opportunity cost of holding the yellow metal, which is a non-interest-paying asset, thus making it more attractive to investors.

Gold is entering a bullish super-cycle, analysts say

Longer-term prospects for the previous metal remain upbeat, according to several leading analysts, who are arguing there is evidence that commodities – including Gold – are entering a new bullish super-cycle.

“The last [two] times we saw these valuations for commodities was 1971 and 2000,” tweeted Michaël van de Poppe, Founder of MN Consultancy. “Commodities & #Crypto are extremely undervalued and it’s likely that commodities go into a 10-year long bull market.”

Van de Poppe is not the only commentator saying commodities are entering a secular bull market. According to a recent “Flow Show” note from Bank of America Investment Strategist Jared Woodard, a “commodity secular bull market in the 2020s is just getting started as debt, deficits, demographics, reverse-globalization, AI & net-zero policies are all inflationary,” reported Kitco News.

Technical Analysis: Gold stalls in uptrend

Gold’s price has pulled back into the $2,570s, however, the trend is bullish in the short, medium, and long-term. Given that it is a principle of technical analysis that “the trend is your friend,” the odds favor more upside. If there is a correction, therefore, it is likely to be short-lived before Gold resumes its broader uptrend.

XAU/USD Daily Chart

Gold is not yet overbought according to the Relative Strength Index (RSI), but it is close to overbought. If it enters the zone on a closing basis it will advise traders not to add to their long positions, although the rally may continue. If it enters overbought and then exits back into neutral it will be a sign of a deeper correction.

In the event of a correction, firm support lies at $2,550, $2,544 (0.382 Fibonacci retracement of the September rally), and $2,530 (former range high).