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Gold price holding support at $1,700 as U.S. retail sales rise 1% in June

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(Kitco News) - The gold market is holding support at $1,700 as U.S. consumers appear to be on solid footing, buying more than expected in June.

U.S. retail sales advanced 1.0% last month following a upwardly revised drop of 0.1% in May, according to the latest data from the U.S. Commerce Department. Economists were expecting to see a rise of 0.9% in last month’s headline number.

Core sales, which strip out vehicle sales, also beat expectations and were up 1% last month versus the projected advance of 0.7%. The report’s control group, which strips out autos, gas, building materials, and food services, increased 0.8%, beating expectations of a 0.3% gain.

The strong gains in retail sales comes as consumers saw inflation rise to its highest level in 40 years last month.

The gold market is seeing little reaction to the latest positive economic data. August gold futures last traded at $1,702.30 an ounce, down 0.23% on the day.

Economists note that the strong rise in retail sales will help ease fears that the U.S. is close to a recession. Economists have also said that the data also supports the Federal Reserve’s aggressive monetary policy stance.

While some economists are optimistic on the health of the U.S. economy others are skeptical. Katherine Judge, senior economist at CIBC, said that consumers are still faced with falling purchasing power, which will continue to impact consumption.

“Retail sales bounced back in the US in June, but much of the advance owes to higher prices,” she said. “These figures will clearly look less impressive in volume terms, and we expect the erosion in consumer purchasing power to weigh on goods spending ahead.”

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