(Kitco News) - The gold market is struggling to find any bullish traction, as solid consumption in December continues to support healthy economic activity.
Wednesday, the U.S. Census Bureau said retail sales increased 0.6% last month, following November’s increase of 0.3%. The data beat economist expectorations as consensus forecasts looked for a 0.4% increase.
For the year, headline retail sales have increased 3.2%, the report said.
At the same time, core retail sales, excluding auto sale, rose by 0.4% in December; economists were expecting to see a 0.2% increase. Meanwhile, control group, which excludes automobiles, gasoline, building materials, and food services, and feeds directly into GDP calculations, increased 0.8%, up from November’s revised increase of 0.5%. Economists were expecting to see a 0.2%.
The gold market saw some solid selling momentum in initial reaction to the better-than-expected economic data, how it has managed to pare its losses. February gold futures last traded at $2,028.10 an ounce, down 0.10% on the day.
Some economists note that although consumers continue to face higher borrowing costs, tighter credit conditions and higher prices, spending is being fueled by a strong job market and rising wages.
“The 0.6% m/m rise in retail sales in December may have been supported by the unseasonably mild weather, but it still means there is no sign that households are buckling under the pressure of higher interest rates with their excess savings mostly spent,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
However, Hunter added that he still expects to see slower growth through 2024, which would prompt the U.S. central bank to ease interest rates.
“We still think a further slowdown lies ahead, as slowing employment and wage growth feed through and the lagged impact of higher interest rates takes some additional toll, but there is still little to suggest a sharper downturn lies in store,” he said.
