Gold, silver rise on lower Treasury yields after weak retail sales

Gold and silver prices rose on Wednesday as US Treasury bond yields fell after data showed December retail ​sales growth stalled, signalling a softening economy ahead of ​key jobs data.

Spot gold was 0.5 per cent higher at $5,049.59 per ounce by ‌0242 GMT.

US gold futures for April delivery gained 0.9 per cent to $5,073.40 per ounce.

Spot silver was up 2.2 per cent at $82.43/oz, after falling more than 3 per cent in the previous session.

"Over the last couple of weeks, (precious metals) became very dislocated from fundamentals, so it pretty much decoupled from interest rate policy. Yields being lower are obviously supportive of gold today," said Kyle Rodda, a senior market analyst at Capital.com.

 

US yields fell on Tuesday after a raft of data suggested the economy may be softening, giving the US Federal ‌Reserve more room to cut interest rates. 

Falling yields reduce the cost of holding metals and often come with macro signals that favour them.

US retail sales were unchanged in December as households scaled back spending on motor vehicles and other big-ticket items, potentially setting consumer spending and the economy on a slower growth path.

"After soft retail sales numbers, there's the expectation that perhaps, ​further and deeper rate cuts may be needed more imminently than previously thought," Rodda added.

Federal ‌Reserve Bank of Cleveland President Beth Hammack, however, said on Tuesday that the US central bank faces no urgency to change the setting ​of ‌interest rates this year amid a "cautiously optimistic" outlook for economic activity.

Investors expect at least ‌two 25-basis-point rate cuts in 2026, with the first one expected in June. Non-yielding bullion tends to do well in low-interest-rate environments. 

Investors await the ‌non-farm ​payrolls report for ​January, due later in the day, and inflation data on Friday for more cues on the Fed's monetary policy path.

Spot platinum rose ‌2 per cent to $2,127.80 per ​ounce, while palladium added 1.8 per cent to $1,738.62.