Harmovest Capital | Key Insights: Is the Return of Risk Appetite Limiting Gold's Downside?

27/04/2026

Key Highlights

• UK retail sales data exceeded expectations

• Market safe-haven sentiment continued to ease

• Gold downside risk remains limited

Market Review

UK retail sales data came in stronger than expected. Compared with Q4 2025 (October–December), retail sales volumes in Q1 2026 (January–March) are estimated to have increased by 1.6%, indicating resilient consumer spending.

Sales in non-food stores showed improvement, particularly in art, cosmetics, and personal care products, driven largely by the launch of new product lines. Meanwhile, online and non-store retailers also recorded steady growth during the first quarter.

Following a 1.8% increase in January and a 0.6% decline in February, retail sales are projected to rebound by 0.7% in March, suggesting that consumer activity is gradually stabilizing. Fuel sales rose significantly during the month, with retailers reporting that consumers stocked up on fuel amid rising prices.

Excluding automotive fuel, total retail sales still posted a modest 0.2% increase. Clothing sales improved due to warmer weather, while demand for computers, telecommunications products, and online retail goods rose following new product launches.

In the 12 months ending March 2026, total retail sales volumes (including automotive fuel) increased by 1.7% year-on-year, although they remained 0.1% below pre-pandemic levels recorded in February 2020.

Overall, stronger-than-expected retail data boosted confidence in the UK economic outlook. Markets widely expect the Bank of England to keep interest rates unchanged in the near term, providing short-term support for the British pound.

Affected Financial Instruments

• U.S. Dollar (USD)

• Gold (XAU)

• S&P 500 Index

Summary

As UK retail sales once again exceeded market expectations, coupled with the ongoing impact of geopolitical developments related to Iran, investors increasingly anticipate that the Bank of England will maintain its current interest rate stance. This expectation is likely to provide short-term support for the British pound, while gold may begin to face downside pressure.

Today's Key Event Analysis

UK Retail Sales Data

Markets will closely monitor the UK retail sales release today. Historical data suggests that the UK economy has been gradually slowing, leading market participants to initially expect weaker figures than forecast.

Affected Markets

• U.S. Dollar

• Precious Metals (Gold, Silver, Platinum)

• U.S. Equity Indices

Today's Trading Bias

Bullish on Precious Metals

Market Sentiment Analysis

Fear & Greed Index

Market Sentiment Analysis

Fear & Greed Index

The Fear & Greed Index is a key indicator used to measure market sentiment, reflecting whether investors are currently driven more by fear or greed.

According to the latest data, the index stands at 70 (Risk-On sentiment), compared with the previous reading of 36, indicating that safe-haven demand has continued to decline.

Markets are gradually digesting the geopolitical tensions surrounding Iran, leading to a cooling in safe-haven sentiment. As a result, the U.S. Dollar Index has entered a downward trend, while risk assets such as equities and cryptocurrencies have begun to move higher.

Technical Analysis

XAUUSD (Gold)

Following U.S. President Trump's announcement of a two-week ceasefire with Iran, market safe-haven demand declined significantly. Meanwhile, the 10-year U.S. Treasury yield has started to trend lower, indirectly supporting gold prices.

From a technical perspective, gold has broken above the 4844 resistance level, and is expected to maintain a strong upward trend in the short term. Investors are advised to continue positioning on the long side, with key support to watch around the 4675 level.