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Gold price unable to catch a bid following significant drop in U.S. retail sales

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(Kitco News) - The gold market is struggling to hold on to modest gains even as U.S. consumers bought fewer items last month at the start of the Christmas holiday shopping season.

U.S. retail sales fell 1.1% in November following October’s 0.3% rise, according to the latest data from the U.S. Commerce Department, released Wednesday; the data significantly missed expectations as economists were forecasting an drop of 0.3%.

Meanwhile, core sales, which strips out vehicle sales fell 0.9% last month, following October’s rise of 0.2%. Economists were expecting to see a 1% rise.

The control group, which excludes autos, gas, building materials, and food services fell 0.5%. Economists were expecting to see a 0.2% increase.

Despite the sharply disappointing data, the gold market is seeing little reaction. February gold futures last traded at $1,857 an ounce, up 0.09% on the day.

"Overall these numbers are a huge disappointment. The data are a shot across the bow to those in Washington who are still working on a stimulus deal (but with hopes for one imminently)," said Greg Michalowski?, currency analyst, at "That may be the glimmer of hope in what is a bad report across the board. "

Katherine Judge, senior economist at CIBC said that the retail data shows that the second wave of the COVID-19 Pandemic is taking its toll on the U.S. economy. She added that the data will only get worse.

“Since spending on services, rather than goods, will show more of the impact of Covid, total consumption for November is set to look even worse than implied by this data. Spending is likely to be lackluster in December as well as the usual holiday gatherings are hindered this year,” she said.

Paul Ashworth, chief U.S. economist at Capital Economics said that until the vaccine deployment reaches critical mass, hopefully as early as the second quarter, it is going to be a bleak winter.

“With case numbers still trending higher and restrictions getting tighter, we anticipate a further decline in spending this month too,” he said. “Overall, this weakness supports our view that fourth-quarter GDP growth will be less than 4% annualized, with the weak hand-off likely to make first-quarter growth even weaker than that.”

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