Gold prices gained, shrugging the early morning losses after poor US economic data increased hopes of a longer period before the increase of interest rates by the Federal Reserve.
December delivery contract, the most actively traded, was up 0.2% or $2.30 at $1,236.60 per troy ounce on the Comex of the New York Mercantile Exchange, as reported by The Wall Street Journal.
On Wednesday, the Commerce Department reported a 0.3% drop in US retail and food sales, which was the first decline since January. The drop was higher than the 0.1% that economists had predicted. The data reflects weak growth in wage and lackluster demand that is preventing business from passing the price increases to consumers.
Newedge broker, Thomas Capalbo said, “Everything came out much worse than expected and this was positive news for gold.”
George Gero, metal strategist at RBC Capital Markets LLC was quoted by Bloomberg as having said, “We are seeing some renewed interest in gold. Investors are responding to weak economic numbers and the slump in the US equities.”
Gold is considered a haven from economic turbulence as investors purchase the metal on belief that it will maintain its value better than other types of assets in the event of an upheaval.
The metal has received support from the prolonged period of the accommodative monetary policy by the Fed. Gold will have an easy time competing with assets such as Treasury bonds, which bare assets when the rates are lowered to near zero since it does not earn interest.
Silver gained on the Comex while palladium and platinum, metals used mainly in industrial applications, dropped on the New York Mercantile Exchange.
R.J. O’Brien & Associates senior commodity broker Phil Streible said, “The retail sales numbers were disappointing, and people were getting worried about the growth momentum coming to a halt. We could see some safe-haven buying today.
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