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Gold Remains Higher After May U.S. Retail Sales Rise 0.8%

Kitco News

Editor's Note: Updating earlier story with economist comments

(Kitco News) - Gold futures hung onto their gains despite a government report Thursday showing that U.S. retail sales jumped by 0.8% to $502 billion during May. Meanwhile, sales excluding autos were up 0.9%.

Going into the report, consensus expectations compiled by news organizations had been for a rise of 0.4% in overall sales. Sales excluding autos were forecast to be up by either 0.4% or 0.5%.

Normally, stronger-than-forecast economic data hurt gold since they mean potential for more monetary tightening than markets had already factored into prices. However, gold came into the day with a stronger tone and the precious metals held onto most of those gains despite the stronger-than-forecast reports on retail sales and initial jobless claims.

As of 8:31 a.m. EDT, Comex August gold was last up $9.60 to $1,310.60 an ounce, compared to $1,312.90 an ounce three minutes prior to the reports.

“U.S. retailers saw stellar sales in May, with the headline number doubling the street's forecast,” said Katherine Judge of CIBC Economics. 

She later added: “Gasoline station receipts were up strongly on the month, while the first gain for building materials this year also boosted the headline print. That said, the control group, which feeds more directly into GDP [gross domestic product], also posted a decent showing, advancing by 0.5%, continuing a trend of healthy readings that began a few months ago. Only two of the core categories were down on the month, suggesting that spending across the board showed healthy gains.

“This supports our view of pickup in consumption over the next couple of quarters, owing to tightening labor markets and fiscal stimulus. Today's data has been supportive of the USD [U.S. dollar].”

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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