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Gold prices push higher following disappointing U.S. retail sales numbers

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(Kitco News) - The gold market is seeing further gains Friday as U.S. consumers decided to hold on to their cash last month.

U.S. retail sales were unchanged last month, following March’s revised increase of 10.7% according to the latest data from the U.S. Commerce Department, released Friday; the data significantly missed expectations as economists were forecasting an increase of 1.0%.

Annually, the report said that headline retail sales numbers are up 51.2%; however, last year most Americas were confined to their homes due to government imposed lockdowns.

Meanwhile, core retail sales, which strips out auto sales, dropped 0.8% last month, following March’s rise of 8.4%. Core sales also missed expectations, with consensus forecasts calling for a 0.5% rise.

The control group, which excludes autos, gas, building materials, and food services fell 1.5%. Economists were expecting to see a 0.4% drop.

The disappointing economic data is helping the gold market claw back some of its lost territory. June gold futures last traded at $1,835 an ounce, up 0.6% on the day.

According to some analysts, the latest retail sales numbers continue to show just how fragile the current economic recovery is. Despite the strong revision in March, consumers are still hesitant to spend their money.

Although inflation pressure are rising, the latest economic data will give the Federal Reserve more flexibility to maintain their ultra-loose monetary policies, economists have said.

"This is one more report that throws cold water on notions of the Federal Reserve tightening U.S. monetary policy anytime soon," said Jim Wyckoff, senior technical anlayst at Kitco.com

Andrew Grantham, senior economist at CIBC, said that although the latest retail sales data was disappointing, the bigger picture still points to robust economic growth this year.

“Even after today's disappointment in the control group of retail sales, its level is still not only well above where it stood before the pandemic last February, but also well above the average for Q1 of this year, suggesting goods consumption will remain a big positive contributor to overall GDP for at least one more quarter in Q2,” he said.

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