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Gold prices jump following disappointing September U.S. retail sales numbers

Kitco News

(Kitco News) - Gold prices have jumped into positive territory as U.S. consumers spent less than expected last month.

U.S. retail sales fell 0.3% in September following August’s revised rise of 0.6%, according to the latest data from the U.S. Commerce Department, released Wednesday; the data missed expectations as economists were forecasting an increase of 0.3%.

Meanwhile, core sales, which strips out vehicle sales dropped 0.1% last month, following August’s unchanged reading. Economists were expecting to see a 0.2% rise.

The control group, which excludes autos, gas, building materials, and food services was unchanged last month. Economists were expecting to see a 0.3% increase.

Gold prices were in negative territory ahead of the report and have spiked higher in initial reaction. December gold futures last traded at $1,488.10 an ounce, up 0.31% on the day.

Adam Button, managing director at Forexlive.com, described the latest consumption data as “poor,” but it will continue to support gold as he sees growing probability of a rate cut at the end of the month.

“The report hits at a delicate time ahead of the Oct 30 FOMC meeting and will tilt some voters towards supporting a cut,” he said.

Jim Wyckoff also sees the latest economic data as supportive for gold because of growing easing expectations following the retail sales data.

“This report falls into the camp of the monetary policy doves who want to see further U.S. lowering of U.S. interest rates,” he said.

Although the data was significantly worse than expected, Katherine Judge, senior economist at CIBC noted that the drop came following strong gains in July and August.

She added that she is not expecting to see a significant weakness in consumer consumption going forward.

“Given slower hiring, we expect consumption to slow ahead while remaining reasonably healthy,” she said.

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