Investing.com - Gold prices edged higher in European trade on Monday, as disappointing U.S. economic data tempered expectations of a near-term interest rate hike by the Federal Reserve.
Gold for December delivery on the Comex division of the New York Mercantile Exchange tacked on $2.10, or 0.15%, to trade at $1,345.30 a troy ounce by 06:55GMT, or 2:55AM ET.
U.S. retail sales were flat in July, the Commerce Department said Friday, disappointing forecasts for a 0.4% rise and slowing sharply from growth of 0.8% in the preceding month.
Meanwhile, the July reading of the producer price index showed a decline of 0.4%, the largest drop since September 2015 and confounding expectations of a 0.1% gain.
The downbeat data led investors to push back expectations for the next U.S. rate hike. Fed funds futures are currently pricing in just a 9% chance of a rate hike by September. December odds were at around 45%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slumped to a more than one-week low of 95.19 in wake of the disappointing data. It was at 95.64 by early Monday.
The yellow metal flirted with a more than two-year high above the $1,370-level earlier this month before coming under pressure as a robust U.S. employment report revived speculation of a U.S. interest rate hike in the coming months. But those hopes were dashed following the release of a recent string of unexpectedly weak data.
In the week ahead, market players will be turning their attention to Wednesday’s minutes of the Federal Reserve’s July policy meeting for fresh clues on the timing of the next U.S. rate hike.
U.S. inflation data will also be in focus, as investors attempt to gauge if the world's largest economy is strong enough to withstand an increase in borrowing costs in the coming months.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
For the year, the precious metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.
Also on the Comex, silver futures for September delivery inched up 10.9 cents, or 0.55%, to trade at $19.81 a troy ounce during morning hours in London.
Meanwhile, copper futures gained 0.2 cents, or 0.09%, to $2.142 a pound after touching a session low of $2.133, a level not seen since July 8 amid ongoing concerns over the strength of China's economy.
Data released Friday showed that Chinese industrial production gained 6.0% in July, below expectations for 6.1%, fixed asset investment rose 8.1%, missing forecasts for 8.8%, while retail sales increased 10.2%, a tad worse than analyst projections of 10.5%.
That followed a string of disappointing figures released earlier this month, keeping alive hopes policymakers will unleash more stimulus in the coming months to meet ambitious economic growth targets.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.