Gold price at daily highs as U.S. retail sales fall in May

(Kitco News) Gold was trading near new daily highs following disappointing retail sales data from May, with high inflation spooking U.S. shoppers.

U.S. retail sales declined 0.3% last month following a downwardly revised increase of 0.7% in April, according to the latest data from the U.S. Commerce Department. Economists expected a rise of 0.2% in last month’s headline number.

Immediately after the publication, August Comex gold futures ticked up, last trading near fresh daily highs at $1,836.60, down 1.26% on the day. 

Core sales, which strip out vehicle sales, also fell short of expectations, rising 0.5% versus the projected advance of 0.8% in May. The report’s control group, which strips out autos, gas, building materials, and food services, was flat, disappointing expectations of a 0.5% gain.

A drop in retail sales in May is a sign that U.S. consumers are getting hit by high inflation numbers, which is why retail spending is slowing, said CIBC Capital Markets senior economist Katherine Judge.

"Retail sales took a step back in the U.S. in May, showing that elevated prices are starting to meet consumer resistance. May's figure included a drop in auto sales, against an outsized gain in receipts at gasoline stations, in line with the climb in prices," Judge said following the data release. "And while it's only one month, this is a sign that higher prices are starting to thwart consumer demand, which could be key to dampening inflation in the future, along with interest rate hikes. Odds are that this isn't enough to deter the Fed from a 75bps hike today."