Gold prices could struggle as jump in US retail sales could delay rate cuts

U.S. retail sales jumped 1.7% in March, up from February’s revised increase to 0.7%, the U.S. Commerce Department announced on Tuesday.

The data was better than expectations, as the consensus of economists projected a 1.4% increase in last month’s headline number.

In annual terms, retail sales increased 4%, the report said.

Core sales, which strip out vehicle sales, increased sharply by 1.9% in March, compared to February’s increase of 0.7%. The increased spending was better than expected, as economists were looking for a 1.4% increase.

The gold market is not seeing much reaction to the latest retail sales data. Spot gold last traded at $4,776.80 an ounce, down nearly 1% on the day.

Although gold prices remain in a sideways pattern, Naeem Aslam Chief Investment Officer at Zaye Capital Markets, said that the market is in a difficult position as the strong data could force the Federal Reserve to maintain its neutral monetary policy through the second half of the year.
“This is not just a strong print — it’s strong against a high bar, which means markets now have to seriously question how quickly policy easing can realistically happen,” he said.

He added that gold remains caught in a tug of war between ongoing chaos in the Middle East, impacting inflation and growth, and resilient U.S. economic activity.

“What stands out is that gold, despite this strong data, is not seeing a deeper sell-off — suggesting that safe-haven demand linked to ongoing Middle East tensions is still providing a structural floor. At the same time, Brent crude holding above 91 reflects that oil is being driven less by demand expectations and more by supply-side risks, particularly around the Strait of Hormuz,” he said. “This creates a complex market setup where strong economic data is pushing rate expectations higher, while geopolitical risk continues to keep commodities elevated, limiting the downside in inflation-sensitive assets.”

Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management, highlighted the latest retail sales numbers with the recent dismal sentiment surveys.

“It’s true that people can both be unhappy with higher prices (and higher mortgage rates) and continue to buy and that belies a greater truth, which is that as long as people are employed then they are going to keep spending, so the labor market is a much more important indicator in this economy than almost anything else,” he said.