Gold has been falling in the market as of late. However, you wouldn’t know that by looking at what we’re seeing from the commodity today. In fact, gold is finding its way upward. Ultimately, the declines have to do with poor earnings in the United States retail sector. Today, we’ll talk about what we’re seeing from the United States retail sector, why the news is leading to gains in gold, and what binary options traders should be watching for ahead.
US Retail Sector Is Struggling
As mentioned above, the retail sector in the United States is struggling. This, in particular, can be seen through recent earnings reports that have been released by retailers in the United States. Two of the most recent reports came from JC Penny and TJX. Here’s what we saw…
- JC enny – JCPenny is one of the largest retailers in the world. However, the company has been facing issues for some time now. Unfortunately, sales declines continue. Throughout the first quarter, the company said that its like-for-like sales, which are regarded as an incredibly important metric among investors, were down 3.5%. Analyst projected that the figure would be down 0.7%. Unfortunately, this is one of the most recent examples of issues with retail in the United States.
- TJX – TJX is the owner of major retail chains in the United States including Marshalls, TJ Maxx and HomeSense. Unfortunately, the company simply isn’t seeing the growth in sales that investors had been expected. In fact, in the first quarter, sales only rose by 1%. Unfortunately, the blues for TJX investors didn’t stop there. The company said that it is expecting declines in the current quarter as well. This is a key factor with regard to gold declines considering that even at the discount names, we’re seeing declines in sales.
Why This Is Sending Gold Upward
At first glance, it may seem as though earnings at retail companies in the United States has absolutely nothing to do with the price of gold. However, that notion couldn’t be further from the truth. The reality is that gold is priced using the USD. Therefore, when anything happens that causes movement in the USD, it will likely cause movement in gold. When the USD falls, gold becomes less expensive around the world, leading to gains in demand for gold and causing gains in price. When the USD is on the way up, gold becomes more expensive around the world, leading to declines in demand and price.
With that said, a currency is only as strong as the economy it represents. With retail sales representing about 35% of the GDP in the United States, overwhelmingly positive quarterly results, or overwhelmingly negative quarterly results from the majority of retailers in the United States, as we’re seeing at the moment, will generally lead to movement in the USD. Because retail earnings reports were so negative, economic concerns are risking, causing declines in the USD, and prompting gains in gold.
What Binary Options Traders Should Be Watching For Ahead
Moving forward, binary options traders should be keeping a close eye on gold as it is likely to present several opportunities ahead. However, if you want to take advantage of these opportunities, it’s going to be important that you stay on top of the news. In particular, pay close attention to anything that would cause movement in the USD. Further retail sector earnings reports, the Federal Reserve, President Trump, and geopolitical conditions are all hot topics. Also, keep an eye on the market as a whole as gold is a safe haven investment. Any updates to any of these stories will likely lead to movement in the value of gold.