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Gold Prices Holding Above $1,200 Following Stronger Than Expected U.S. Retail Sales Numbers

Kitco News

(Kitco News) - The gold market continues to hug critical psychological support above $1,200, following stronger-than-expected retail sales figures last month.

Thursday, U.S. retail sales rose 0.8% in October, following a revised 0.1% decline in September, according to the latest data from the U.S. Commerce Department. Economists were expecting to see a 0.6% rise in the headline number. For the year, sales are up 5%.

At the same time, core retail sales also beat expectations, rising 0.7% last month, reversing September’s 0.1% decline. Consensus forecasts were calling for an increase of 0.5%.

However the control group, which strips out gas, autos, food and building material purchases, rose in line with expectation, rising 0.3% last month.

The gold market has struggled to find momentum lately as investors continue to focus on the U.S dollar. December gold futures last traded at $1,210.40 an ounce, relatively unchanged on the on the day.

According to the report, auto sales was a significant driver of consumer spending last month. For some economists the strong October report, ending two months of declines sets expectations for a strong holiday shopping season.

“There are plenty of worries about slowing global growth these days, but don't tell that to American shoppers, who were still out on a spending spree at stores in October,” said Avery Shenfeld, senior economist at CIBC World Markets. “Look for consumer spending to remain a healthy growth contributor for Q4 as a whole, helped by better wages and ongoing job growth, but the quarter/quarter impacts of tax cuts are fading from these numbers relative to what we saw in the spring.”

Although consumers continue to spend, Michael Pearce, senior U.S. economist at Capital Economics said that they are starting to see slowing momentum, which will start to impact economic growth next year.

“With consumer confidence still high, much of this extra cash is likely to filter through to spending on other goods and services,” he said. “But we doubt that will be enough to replace the boost from the earlier fiscal stimulus or offset all of the headwind from tighter monetary policy. Accordingly, consumption growth still looks set to slow next year.”

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