Low retail numbers boosting gold this morning. U.S. retail sales fell in September for the first time in seven months. Sales dropped 0.3% as households slashed spending on building materials, online purchases and especially automobiles according to the latest data from the U.S. Commerce Department. A 0.2% rise had been forecast. These unexpected numbers are raising concerns that the slowdown in the American manufacturing sector could be bleeding into the consumer side of the economy.
The Gold December contract jumped back above $1,490 on the news. It had settled yesterday at $1,483.50.
Gold started edging up earlier this morning as uncertainty over a Brexit agreement and the U.S.-China trade standoff boosted the yellow metal’s luster as a hedge against uncertainty.
European Union and U.K. officials are set to resume Brexit talks Wednesday in the hope of reaching a deal that can be ratified at a key summit Thursday, the BBC reported. Under legislation the British Parliament passed last month, Prime Minister Boris Johnson must ask for a delay to the U.K.’s scheduled departure from the bloc if he doesn’t get MPs to approve a new deal by Saturday. The U.K. is set to leave the EU at 11 p.m. GMT Oct. 31.
China on Wednesday warned it would take unspecified countermeasures against the U.S. if Congress enacts legislation supporting Hong Kong protesters, Bloomberg reported. The warning from the Foreign Ministry comes after the U.S. House of Representatives passed a block of measures backing a pro-democracy movement in the former British colony. China and the U.S. are trying to resolve a trade standoff that pushed gold to a six-year high earlier this year.
Gold slid 0.4% in the first two days of this week but remains up 0.7% this month. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.22% on Tuesday from Monday, Reuters reported.
Silver’s losses Tuesday outpaced gold’s. The metal decreased 1.8% Tuesday to settle at $17.38 an ounce on Comex. The December contract is little changed for the week through Tuesday and up 2.3% in October. Spot palladium rose and spot platinum fell.
Investors are also looking to economic data for signs on the health of the global economy and indictors about monetary policy from the U.S. Federal Reserve and other central banks.
The International Monetary Fund on Tuesday slashed its global growth forecast for the year to 3%, the slowest rate since the recession, from a July estimate of 3.2%. The bank blamed trade disputes, Brexit and other geopolitical crises. The U.S-China trade standoff will trim 0.8% off global GDP by 2020, it said.
This morning, the CME FedWatch Tool is showing that 87.1% of investors think the Fed will reduce interest rates by 25 basis for a third consecutive time when policy makers meet on Oct. 30. The probability of no change was 12.9%.
U.S. monthly retail sales and the Beige Book report on the 12 Fed regions come out Wednesday, and weekly jobless claims are scheduled for Thursday. China is set to release third-quarter GDP figures, September industrial production an retail sales data Friday.
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