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Gold prices holding within striking distance of $1,800 as U.S. retail sales rise 1.3% in October

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(Kitco News) - The gold market is holding on to solid gains and remains in striking distance of $1,800 as U.S. consumers went on a significant shopping spree last month.

U.S. retail sales rose 1.3% last month following a roughly unchanged reading in September, according to the latest data from the U.S. Commerce Department. The data significantly beat expectations. Economists were expecting to see a rise of 1.0% in last month's headline number.

The report said retail sales are up 8.3% for the year.

Core retail sales also increased 1.3% last month, beating expectations. According to Consensus estimates, economists were looking for a 0.5% rise.

The report's control group, which strips out autos, gas, building materials, and food services and feeds directly into GDP projections increased by 0.7%, beating expectations for a 0.3% gain.

The gold market is seeing little reaction to the latest economic data as it continues to hold elevated gains. December gold futures last traded at $1,782.30 an ounce, up 0.31% on the day.

The gold market is standing firm following the better-than-expected consumption data as the report has not shifted market expectations. The CME FedWatch Tool shows that markets forecast that the Federal Reserve will raise interest rates by 50 basis points next month.

“While this data is stronger than anticipated, when combined with last week’s weaker-than-expected CPI report, the Fed should remain on track to slow the pace of interest rate hikes in December and deliver a 50bps increase,” said Karyne Charbonneau.

However, some analysts note that the better-than-expected economic data could force the Federal Reserve to maintain its aggressive stance.

“This report will keep the Fed on target for more hikes as they continue their playbook to more restrictive policy,” said Greg Michalowski, currency analyst at Forexlive.com.

Paul Ashworth, chief North America economist, said that the retail sales numbers could ease some fears that the U.S. economy is headed towards a recession.

“We still think the economy will slide into a mild recession in the first half of next year, but our conviction in that call is not as strong as our belief that inflation will come down sharply regardless of what happens to the real economy. Much more of this from the US consumer, and we might be in for a soft landing after all,” he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.