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Gold prices stuck in neutral following 0.3% rise in U.S. retail sales

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(Kitco News) - The gold market is trying to claw its way into positive territory as U.S. consumers shopped less last month, highlighting a dismal start to the holiday season.

U.S. retail sales rose 0.3% last month, following October's revised 1.8% increase according to the latest data from the U.S. Commerce Department, released Wednesday; the data significantly missed expectations as economists were forecasting a 0.8% rise.

For the year, retail sales are up 18.2% from November 2020.

Meanwhile, core retail sales, which strips out auto sales, increased 0.3% last month, following October's reading of 1.7%. Economists were expecting to see a 0.9% increase.

The control group, which excludes autos, gas, building materials, and food services and feeds directly into GDP calculations, dropped 0.1%. Economists were expecting to see a 0.7% rise.

The gold market is seeing little reaction to the latest retail sales numbers as it tries to push into positive territory. February gold futures last traded at $1,772.10 an ounce, relatively flat on the day.

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Some economists aren't too surprised by the disappointing consumption data. Last month, Black Friday holiday shopping was impacted by new COVID-19 headlines as news of the new Omicron variant started to break.

Katherine Judge, senior economist at CIBC, noted that the decline in the control group component came as spending in department stores plummeted. She also noted that inflation is also starting to impact consumer spending.

"Those readings will look even softer in volume terms when accounting for outsized price increases in some categories. That still leaves the control group of sales up by 14% over the past year, implying that there is room for further softness ahead once services are able to reopen on a more sustainable basis when the winter Covid wave is behind us," she said.

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