(Kitco News) - The gold market is trading near session highs after the latest data showed American consumers’ spending rising more than expected last month.
U.S. retail sales rose 1.2% in August following an unrevised reading of -0.6% in July, the U.S. Commerce Department announced on Wednesday.
The data was better than expectations, as the consensus of economists projected a 0.8% increase in August’s headline number.
In annual terms, retail sales increased 6.0%, the report said, against expectations for a 4.7% rise and following July’s unrevised 5.0% increase.
Core sales, which strip out vehicle sales, rose 1.4% in August, well above the consensus for a 0.5% gain, and following July’s downwardly revised -0.2% print.
Spot gold spiked to a session high of $4,353.78 around 7:30 am ET, and last traded at $4,340.98 for a gain of 1.10% on the session.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, said the August Retail Sales report was excellent.
"Given the current path of inflation, relative strength of the labor market and underlying resilience of the consumer, there isn’t any reason why the Fed won’t raise rates by 25 bps this afternoon," he wrote. "The story for most of this year has been robust corporate profits overcoming the twin headwinds."
Jeffrey Roach, Chief Economist at LPL Financial, noted that consumers seem willing to spend on entertainment.
"If we learned anything from this morning’s retail sales numbers, we learned that consumers have the discretionary spending power to keep themselves entertained," he wrote. "Spending on sporting goods and other hobbies rose almost 11% from a year ago, the fifth consecutive month of double-digit growth."
"The control group, which excludes autos, gas, and building materials, rose 5.6% from a year ago and hints at another quarter of above-trend growth," Roach noted. "The control group feeds into the GDP calculations. Real economic growth in Q3 is projected to be 2.1% annualized."
"Given the rebound in retail sales, we are on track for another quarter of solid corporate earnings," he added. "We also expect the Fed will raise rates to address the inflationary pressures coming from the demand side of the economy."
