Gold inches down amid flat Dollar, ahead of key U.S. retail sales report

Gold ticked down on Thursday, amid a relatively steady dollar, as cautious investors awaited the release of monthly retail and consumer data at week's end for greater clarity on the current strength of the U.S. economy.

On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,345.95 and $1,359.25 an ounce before settling at $1,350.15, down 1.75 or 0.13% on the session. Gold, which has closed in positive territory in nine of the last 13 sessions, is on pace to end the week marginally higher. The precious metal is coming off an exemplary first half of 2016, when it soared 25%, posting its strongest first two quarters of a year in three decades. Following Thursday's session, Gold remains near two-year highs from early-July.

Earlier on Thursday, figures from the World Gold Council revealed that consumer demand for the yellow metal soared to 1,064 tons over the first half of 2016, touching all-time highs. Notably, investment, not jewelry, served as the main driver for demand for the second consecutive quarter, according to the Council. The trend is unprecedented.

Gold likely gained support at $1,337.50, the low from July 20 and was met with resistance at $1,391.40, the high from March 14, 2014.

The dollar stayed mostly unchanged in Thursday's session, despite upbeat data concerning weekly jobless claims, which came on the heels of a robust monthly employment report for July. Last week, initial jobless claims in the U.S. fell by 1,000 to 266,000, lingering near historic lows. The four-week moving average, meanwhile, inched up by 3,500 to 262,750, demonstrating little change from recent reports.

Investors also reacted to optimistic quarterly results from Macy’s Inc and Kohl’s Corporation on Thursday ahead of the release of monthly retail data by the U.S. Census Bureau. Shares in Macy's shares went up 15%, after the major department store reported a lower than expected decline in same-store sales in the second quarter and outlined a plan to close 100 stores in a massive turnaround initiative. On Friday, the Census Bureau is expected to report an increase of 0.4% in retail sales last month, following a gain of 0.6% in June. Additionally, the University of Michigan could report a slight uptick in consumer sentiment in July in the wake of a sharp decline of 3.5 points a month earlier.

In February, the National Retail Federation estimated that retail sales (excluding automobile, gas and restaurant purchases) will rise 3.1% for 2016. Over the last decade, the 10-year average came in at annual growth of 2.7%.

The Federal Reserve continues to closely monitor incoming economic data, as it weighs a decision in September on the timing of its next interest rate hike. Last month, the Federal Open Market Committee (FOMC) reiterated that it will tighten monetary policy gradually.

Any rate hikes by the Fed this year are viewed as bearish for Gold, which struggles to compete with high-yield bearing assets in rising rate environments.

The DXY, which measures the strength of the greenback versus a basket of six other major currencies, edged up to an intraday high of 95.87 in U.S. afternoon trading. Since hitting a four-month high at 97.62 in late-July, the Dollar has fallen back by nearly 2%.

Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for September delivery fell 0.117 or 0.58% to 20.053 an ounce.

Copper for September delivery gained 0.020 or 0.92% to 2.191 a pound

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