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Gold prices holding gains, ignores 0.9% rise in U.S. retail sales

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(Kitco News) - Economic data continues to have little impact on gold prices following mixed retail sales numbers. The price is holding its own, seeing some technical buying momentum after holding support at $1,800 an ounce.

Tuesday, U.S. retail sales advanced 0.9% last month following an upwardly revised increase of 1.4% in March, according to the latest data from the U.S. Commerce Department. Economists were expecting to see a rise of 1.0% in last month’s headline number.

At the same time, Core sales, which strip out vehicle sales, beat expectations and were up 0.6% last month versus the projected advance of 0.4%. The report’s control group, which strips out autos, gas, building materials, and food services, rose 1.0%; economists were expecting to see an increase of 0.5%.

The gold market is not seeing much reaction to mixed retail sales numbers. June gold futures last traded at $1,830 an ounce, up 0.87% on the day.

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Andrew Grantham, senior economist at CIBC described the latest retail sales numbers as "solid." He added that the data also supports the idea that the economy can hold up against further aggressive rate hikes from the Federal Reserve.

"While the increase will look less impressive after taking price movements into account, today's data still suggests that the squeeze on household incomes from inflationary pressures isn't yet having a material impact on discretionary spending. Indeed, spending on goods remains well above its pre-pandemic trend, justifying a further 50bp hike from the Fed to cool the economy at its next meeting," he said.

Paul Ashworth, chief U.S. economist at Capital Economics also expects the Fed to continue raising by 50 basis points.

"Never bet against the US consumer has always been a good adage to bear in mind throughout my 20-plus years in the markets. Despite the surge in prices weighing on their purchasing power, the US consumer now appears to be single-handedly keeping the global economy afloat," he said.

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