Gold price holding steady following disappointing U.S. retail sales numbers
(Kitco News) - The gold market is holding on to its overnight gains as fewer U.S. consumers went shopping in August.
U.S. retail sales rose only 0.6% in August following July’s revised rise of 0.9%, according to the latest data from the U.S. Commerce Department, released Wednesday; the data missed expectations as economists were forecasting an increase of 1.1%.
July’s data was revised lower from its initial estimate of 1.2%
Meanwhile, core sales, which strips out vehicle sales rose 0.7% last month, following July’s rise of 1.9%. Economists were expecting to see a 1% rise.
The control group, which excludes autos, gas, building materials, and food services fell 0.1%. Economists were expecting to see a 0.3% increase.
The weaker than expected data has seen gold prices push a few dollars higher in initial reaction. December gold futures last traded at $1,977.10 an ounce, up 0.55% on the day.
The weaker than expected consumption data came a month as U.S. government’s $600 a week enhancement to unemployment benefits ended. Many economists noted that the extra benefits was a critical factor in strong sales numbers during the early summer.
Some economists have said that the data do not bode well for further economic growth.
“The control group retail sales is part of GDP. Generally speaking retail sales accounts for two thirds of US GDP,” said Greg Michalowski, currency analyst at Forexlive.com.
Katherine Judge, senior economist at CIBC noted that a worrying sign for consumption is the fact that online sales were down in August. She added that she expects retail sales to continue to decline.
“The weakness in retail sales is likely to continue in the months ahead as government support wanes and labor market progress also cools, with spending on services likely to remain more challenged as re openings have largely hit their limit in many sectors,” she said.