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Gold price down but largely ignored mixed U.S. retail sales numbers

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(Kitco News) - Gold prices remain under pressure below $1,800 an ounce and is seeing little reaction to mixed U.S. retail sales numbers.

U.S. retail sales were unchanged last month following June’s revised increase to 1%, according to the latest data from the U.S. Commerce Department. The data slightly missed expectations; economists were expecting to see a rise of 0.1% in last month’s headline number.

Core sales, which strip out vehicle sales, beat expectations, rising 0.4% last month versus a projected 0.1% decline.

The report’s control group, which strips out autos, gas, building materials, and food services, also beat expectations, rising 0.8%. The control group is a closely watched index as it feeds directly into GDP calculations.

The gold market is hovering near its session lows but is seeing little movement following the latest economic report. December gold futures last traded at $1,783 an ounce, down 0.37% on the day.

Market analysts note that gold prices could continue to struggle as the latest economic data eases some recession fears and give the Federal Reserve further room to aggressively raise interest rates next month.

In reaction to the retail sales numbers, market expectations for a 75-basis point hike jumped to 62.5%, according to the CME FedWatch Tool.

Katherine Judge, senior economist at CIBC, said that falling gasoline prices in the U.S. should continue to provide some relief for consumers who have been feeling the pinch of rising inflation.

“Looking ahead, while the fall in gasoline prices will continue to provide relief to consumers, spending is expected to increasingly be directed towards services, rather than goods categories where excesses in spending remain,” she said.

Michael Pearce, senior U.S. economist, at Capital Economics also noted that easing inflation pressures will lead to stronger growth later in the year.

“With prices no longer rising rapidly, the increase in underlying retail sales is consistent with a rebound in real consumption at the beginning of the third quarter,” Pearce said.

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