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Gold prices near session lows following 0.7% rise in U.S. retail sales

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(Kitco News) - Gold prices are trading at near session lows as U.S. consumers spent more money in August than expected, easing concerns that the economic recovery is losing momentum.

U.S. retail sales rose 0.7% last month, up sharply from July's revised decline of 1.8%, according to the latest data from the U.S. Commerce Department, released Thursday. The data significantly beat expectations as economists were forecasting a 0.7% decline.

The report said that annually, headline retail sales numbers are up more than 15%

The gold market was seeing some significant selling pressure ahead of the retail sales numbers and as added to its losses. December gold futures last traded at $1,766.70 an ounce, down 1.57% on the day.

Meanwhile, core retail sales, which strips out auto sales, surged higher by 1.8% last month, up from July's 0.4% decline. Economists were expecting to see a 0.1% drop.

The control group, which excludes autos, gas, building materials, and food services and feeds directly into GDP calculations, increased 2.5%. Economists were expecting to see a 0.1% decline.

"This is an impressive report," said Adam Button, chief currency strategist at Forexlive.com. "For some perspective, retail sales are 15.1% higher than a year ago. That's well above the trend and the fear is that it mean reverts. So far, we're not seeing the evidence."

Katherine Judge, senior economist at CIBC noted that the control group is 20% above pre-pandemic levels. However, she added that the impact of COVID-19 has not completely vanished.

“There was evidence of the Delta wave impacting activity as restaurant receipts were flat on the month. Most of the damage from Delta will be in service sectors, delaying the shift in spending from goods to services that had been underway,” she said.

According to some market analysts, the data is weighing on gold prices because it supports expectations that the Federal Reserve could announce its plans to reduces its monthly bond purchase at next week's monetary policy meeting.

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