Gold Rises – Retail Sales Plunge

Gold Rises - Retail Sales Plunge

Gold rises as retail sales plunge. After holding steady near a three-week high, supported by speculation of further U.S. economic stimulus measures and growing tensions between the U.S. and China, gold jumps above $1,750.00.

Retail sales dropped 16.4% in April, much farther than the predicted 12.3%. The damage was felt across the retail spectrum, with clothing stores faring worse and grocers showing the only gains. Unsurprisingly, the restaurant sector lagged badly.

President Donald Trump on Thursday threatened to “cut off the whole relationship” between the U.S. and China in an interview with Fox Business, escalating his criticism of the country where the novel coronavirus first appeared. Meanwhile, Federal Reserve Chairman Jerome Powell said Wednesday that more measures are likely to be needed to revive the economy.

The yellow metal typically gets a boost from central-bank stimulus measures because it’s used as a hedge against inflation. Gold is also being used to protect against geopolitical and economic uncertainty as the virus continues to spread around the world and lockdowns have triggered a recession.

The most-active June gold futures contract rose 1.4% Thursday to settle at $1,740.90 an ounce on Comex. It advanced 1.6% in the first four days of the week. Currently, the June contract is $1,748.20, while DG spot is at $1,743.80. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 1.15% Thursday to 1,104.72 metric tons, Reuters reported.

Turmoil in the gold market in March caused HSBC Holdings Plc to lose around $200 million in one day, Bloomberg reported, citing a filing by the bank. The trigger was diverging prices in the New York and London trading hubs because of physical-delivery problems triggered by coronavirus-related lockdowns.

China’s economic began to show some improvement in April as it emerged from lockdown. Industrial output grew by 3.9%, snapping out of the first quarterly contraction in history, according to data released Friday, and retail sales fell 7.5% year on year.

But the hemorrhage in the U.S. jobs market continued on Thursday, with the Labor Department reporting Thursday that another 3 million people filed initial applications for unemployment benefits. The surge has been attributed to lockdowns triggered by the virus. First-time claims based on the weekly data total 36.5 million since the middle of March, representing 22.4% of the labor force in March, CNN said.

The virus known as COVID-19 has killed more than 302,000 people worldwide and sickened almost 4.5 million. About 32% of the cases are in the U.S., though just 28% of the deaths. The U.S. has more cases than any other country. Meanwhile, cities, states and countries began to reopen after lockdowns.

July silver futures increased 3.1% Thursday to settle at $16.16 an ounce on Comex, the highest settlement for a front-month contract in a month. The metal gained 2.4% in the first four days of the week. Currently, the July contract is $16.855, while DG spot stands at $16.53. Spot palladium edged up 0.8% Thursday to $1,878.50 an ounce, though it’s down 1.4% for the first four days of the week. Spot platinum rose 0.9% Thursday to $772.70 an ounce. It was little changed for the week to date. Currrently, DG spot for palladium is $1,860.00 and platinum is $783.40.

 

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