(Kitco News) - The gold market is struggling to hold support at $4,000 an ounce as U.S. consumer spending, a key driver of economic activity, remains relatively healthy.
U.S. retail sales rose 0.2% in June, following May's revised increase of 1.0%, the U.S. Commerce Department announced on Thursday. The data rose in line with economists' expectations.
Over the past 12 months, retail sales increased 6.7%, the report said.
However, beyond the headline number, core retail sales, which strip out vehicle sales, fell 0.2% last month, following May's revised increase of 1.0%. Spending on core goods was weaker than expected, as economists had forecast an unchanged reading.
The control group—which excludes sales from auto dealers, building-material retailers, gas stations, and office supply stores, and feeds directly into U.S. GDP—increased 0.5% in June. The data rose in line with consensus estimates.
Spot gold has struggled in its initial reaction to the retail sales data. Spot gold last traded at $4,001.40 an ounce, down 1.43% on the day.
According to economists, although the retail sales report presented a somewhat mixed picture, it still suggests that consumers are holding up reasonably well despite the challenging inflationary environment. For the gold market, that means the Federal Reserve can continue to focus on its goal of achieving price stability, which could pave the way for interest rate hikes by the end of the year.
Bill Adams, Chief U.S. Economist, Fifth Third Commercial Bank, said that the retail sales numbers are constructive for second-quarter real GDP.
“Not only were sales solid outside of gas stations, revisions were positive too. Sales were marked up in April and May, leaving May’s sales 0.4% higher than previously published. This report will fuel an upgrade to tracking estimates of second-quarter real GDP like the Atlanta Fed’s GDPNow on its next release later today,” he said.
