(Kitco News) - The gold market is holding solid gains above $2,700 an ounce as U.S. retail sales show consumption weaker than expected during the Christmas holiday season.
U.S. retail sales rose 0.4% last month following November’s revised increase of 0.8%, U.S. Commerce Department announced Thursday. Despite the increase, the data came in weaker than expected, as economists' consensus calls projected a 0.6% increase in December’s headline number.
In the last 12 months, retail sales increased 3.0%, the report said.
Core sales, which exclude vehicle sales, were up 0.4% last month and also missed expectations. Economists were looking for a 0.5% increase.
Meanwhile, The report said that the control group – excluding sales from auto dealers, building-materials retailers, gas stations, and office supply stores – which also feeds directly into U.S. GDP, increased 0.7%, beating expectations for an increase of 0.4%.
The gold market has seen solid momentum after prices broke above $2,700 an ounce in overnight trading. The precious metal has been able to hold on to those gains in initial reaction to the disappointing sales numbers. Spot gold last traded at $2,710.60 an ounce, up 0.51% on the day.
Paul Ashworth, Chief North America Economist at Capital Economics, said that despite the headline miss, the increase in the control group bodes well for fourth-quarter GDP.
“As things stand now, we estimate that real consumption increased by 0.4% m/m in December, which would translate into a 3.3% annualised gain in the fourth quarter,” he said. “That 0.4% m/m gain to end the year would also represent a strong handover to the first quarter, when we expect consumption growth to slow only modestly, particularly if households increase spending in an attempt to front-run likely tariffs.”
