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Gold Pares Gain Slightly As Nov. U.S. Retail Sales Rise 0.8%

Kitco News

Editor's Note: Updating earlier story with more details from report, comment from economist and current prices.

(Kitco News) - Gold futures pared sharp overnight gains slightly Thursday after a Commerce Department report showing U.S. retail sales increased by 0.8% to $492.7 billion during November.

Meanwhile, sales excluding autos were up1%.

Going into the report, consensus expectations compiled by news organizations had been for a rise of 0.3% or 0.4% in overall sales. Sales excluding autos were forecast to be up 0.7%.

Further, overall sales data for October were upwardly revised to 0.5% from the previously reported 0.2%. The data came out at the same time as a stronger-than-forecast report on U.S. jobless claims, which fell by 11,000 to 225,000.

As of 8:43 a.m. EST, Comex February gold was $8.30 higher at $1,256.90 an ounce. The metal had been at $1,259.50 three minutes before the reports on retail sales and jobless claims.

“It was a strong start to the holiday shopping season for U.S. retailers, with November sales blowing past expectations…,” said Andrew Grantham of CIBC Economics, adding that the surprise was from the strong sales excluding autos.
“Add in an upward revision to the October figure…and its looks like consumer spending will play a larger role in driving Q4 growth than previously expected. Tracking forecasts for Q4 had been coming down recently, but today's strong retail numbers should reverse that trend.” 
The sectors showing the strongest monthly gains were gasoline stations, 2.8%; non-store retailers, 2.5%; electronics and appliances, 2.1%; and building materials and garden equipment, 1.2%.

On a year-on-year basis, overall retail sales rose 5.8%. They were up 5.7% when excluding autos.

Consumer purchases make up the single largest component of U.S. gross domestic product, thus market participants closely monitor the data as a gauge of the economy.

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