Gold Firms Following Downbeat U.S. Retail Sales Report
London (Jan 14) Gold prices are moderately higher in early U.S. trading Wednesday, pushing to the daily high in the wake of a downbeat U.S. economic report. In overnight trading the yellow metal saw some mild profit taking and chart consolidation after prices Tuesday hit an 11-week high. February Comex gold was last up $3.70 at $1,238.00 an ounce. Spot gold was last up $7.40 at $1,238.75. March Comex silver last traded down $0.276 at $16.875 an ounce.
U.S. advance retail sales came in at down 0.9% in December. That “miss” to the downside boosted gold prices, U.S. Treasury prices and pressured the U.S. stock indexes. Retail sales were expected to have risen by 0.1% in December.
European stock markets and U.S. stock indexes are under pressure Wednesday, amid a “risk-off” trader and investor mentality, due to world economic growth worries. Such is limiting the downside price pressure in safe-haven gold. Late Tuesday the World Bank released its global economic outlook and said overall world growth would be 3% this year, up from 2.6% in 2014. However, the World Bank cut its 2015 forecast, which had earlier called for 3.4% world economic growth.
European stock markets were also pressured by a court ruling that ostensibly approved the quantitative easing move the European Central Bank will likely announce soon. However, selling pressure in European stocks was limited by an upbeat report on Euro zone industrial output released Wednesday.
In another worrisome development on the deflation front, copper prices fell to a 5.5-year low overnight. Copper futures prices this week have plunged. The fact this major industrial metal is in a free fall, along with crude oil prices, does not at all bode well for the raw commodity sector bulls—at least for the near term. Grain futures prices are also eroding this week.
Another U.S. Federal Reserve official said Tuesday it would be a bad idea for the Fed to raise interest rates in 2015. Minneapolis Fed president Narayana Kocherlakota said a U.S. rate hike would impede the U.S. jobs market recovery.
Crude oil prices are near steady early Wednesday, after falling to a nearly six-year low on Tuesday, at $44.20 a barrel basis February Nymex futures. The downdraft in crude oil has been unsettling to much of the market place, including the stock markets. The other key “outside market” on Wednesday finds the U.S. dollar index slightly lower but still not far below last week’s 10-year high.
The next major data point coming into focus for traders and investors is the January 22 meeting of the European Central Bank. The specter of price deflation and rhetoric coming from ECB officials suggest the central bank will soon initiate monetary stimulus in the forming of quantitative easing.
U.S. economic data out Wednesday includes the weekly MBA mortage applications survey, import and export price indexes, retail sales, manufacturing and trade inventories and sales, the weekly DOE liquid energy stock report, and the Federal Reserve’s beige book
Source: KitcoNews
