Gold slips on U.S. Retail Data released this morning for October that showed a rebound.
While October shopping was up, consumers cut back on big ticket items. Commerce Department reports retail sales increased 0.3%, primarily on motor vehicle purchases and higher gas prices. This reversed September’s 0.3% drop and topped a forecast rise of 0.2%.
Gold dipped yesterday after White House Economic Adviser Larry Kudlow said trade talks between the U.S. and China for phase one of a trade agreement were near the final stages. “We are coming down to the short strokes,” he told reporters late Thursday, according to Bloomberg. “We are in communication with them every single day right now.”
The discussions are “not done yet,” he said after an event at the Council on Foreign Relations. Gold skyrocketed earlier this year as a safe haven against uncertainty over the standoff between the two superpowers. It tends to decline on positive news about a potential trade accord.
Equities and Treasury yields climbed on the optimism about a potential trade accord, also reducing gold’s attractiveness as an investment hedge. Unrest in Hong Kong have also spurred investment in money markets.
Earlier Thursday, December gold futures rose 0.7% to settle at $1,473.40 an ounce on Comex. Bullion gained 0.7% in the first four days of the week. Currently, the December contract is at $1,465.60.
Chinese industrial production growth slowed in October from September, according to the South China Morning Post. Industrial production expanded by 4.7% last month, compared with 5.8% in September, missing analysts’ expectations of 5.4%. Retail sales also slowed to the lowest monthly rate since April. Fixed-asset investment growth also lagged.
U.S. retail sales data come out on Friday. U.S. weekly jobless claims rose to a five-month high last week, according to Labor Department data released Thursday.
Investors continue to keep a close eye on economic news for indications on whether the Federal Reserve will cut interest rates for a fourth consecutive time in December. There is a shift this morning, as the CME FedWatch Tool shows a 2.2% chance of a hike, with a 97.8% chance of no change at the Federal Open Market Committee’s next meeting Dec. 11.
“Our forecast is, and our expectation very much is, one of continued moderate growth,” Fed Chairman Jerome Powell said in testimony Thursday before the House Committee on the Budget. “The U.S. economy is the star economy these days.”
Silver increased 0.7% Thursday and advanced 0.9% in the first two days of the week. The most-active December contract settled at $17.03 an ounce on Comex. It also rebounded over the past two days from the lowest level in more than three months.
Spot platinum and spot palladium also rose Thursday and are down for the week.
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