Gold surges to 5-wk high as US retail sales cause concern

Otmane El Rhazi from The Bullion Desk.

The gold price struck its highest in more than a month on Wednesday afternoon after forecast-missing US data fuelled a large upward move in the euro.

Spot gold was last at $1,214.80/1,1215.50 per ounce, up $22.70 on the previous session’s close and just back from a five-week high of $1,218.50.

Uninspiring US data suggests that the economic slowdown in the first quarter that was initially thought to be a temporary blip may continue into the second quarter and ultimately stay the Fed’s hand on the normalisation of monetary policy. This knocked the dollar back to just short of its lowest in three months at 1.1367 against the euro, giving gold the impetus to move higher.

US retail sales at 0.0 percent missed consensus of 0.3 percent while the core figure at 0.1 percent fell short of the expected 0.4 percent. Import prices at -0.3 percent undershot the forecast 0.3 percent.

“Weaker-than-expected US retail sales have triggered a further downside correction in the dollar as the weight of evidence for faltering US economic momentum rises, providing gold with increased upside,” FastMarkets analyst Tom Moore said.

Elsewhere, EU flash GDP growth at 0.4 percent and industrial production at -0.3 percent both missed respective forecasts of 0.5 percent and 0.1 percent.

French preliminary GDP was better than expected at 0.6 percent, as was the Italian figure at 0.3 percent, but the German reading of 0.3 percent missed the predicted 0.5 percent. German final CPI at 0.4 percent was as expected and French CPI undershot at 0.1 percent.

Out of China, industrial production at 5.9 percent missed the forecast 6.1 percent, fixed asset investment was lower at 12 percent and retail sales undershot at 10 percent. New loans at 708 billion yuan were lower than the expected 1.21 trillion yuan and M2 money supply at 10.1 percent undershot the forecast 11.9 percent.

Other metals also performed well – silver also hit its highest in a month at $17.20, though it has since fallen back to $17.14/17.19 per ounce, up 66 cents. Platinum climbed $20 to $1,147/1,152 while palladium was up $6 at $787/792.

 

(Editing by Mark Shaw)

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