(Kitco News) - U.S. economic activity appears to be losing some momentum as U.S. consumers made significantly fewer purchases in July. However, weaker than expected retail sales numbers are having little impact on gold as prices test resistance just below $1,800 an ounce.
U.S. retail sales fell 1.1% in July, down from June’s revised increase of 0.7%, according to the latest data from the U.S. Commerce Department, released Tuesday; the data significantly missed expectations as economists were forecasting a 0.2% rise.
This is the second time in three months that consumers have cut back on spending.
The gold market is trying to find some traction following the disappointing numbers. December gold futures last traded at $1,792.60 an ounce, up 0.16% on the day.
Meanwhile core retail sales, which strips out auto sales, dropped 0.4% last month, down from June’s revised reading of 1.6%. Economists were expecting to see a 0.2% increase.
The control group, which excludes autos, gas, building materials, and food services and feeds directly into GDP calculations, dropped 1%.
“The data is disappointing. The consumer represents two thirds of the economy,” said Adam Button, chief currency strategist at Forexlive.com
Although the headline data was disappointing, Katherine Judge, senior economist at CIBC said that there was some good news in the numbers. However, she also noted that the spreading COVID-19 Delta variant continues to pose a significant risk to global growth.
“The headline masked gains in restaurant spending despite the spread of the Delta variant, while gasoline sales also rose in line with price increases. With sales in the control group still 18% above pre-pandemic levels, a further easing off in goods spending ahead is likely as demand shifts to services,” she said.
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