Gold rises from morning lows on better economic news
New York (May 13) Gold prices have moved to modestly higher levels in early U.S. trading Tuesday. The metal got a lift from a just-released U.S. retail sales report that showed only tepid growth and did not meet market expectations. However, gains are limited by the recent sharp rebound in the value of the U.S. dollar against the Euro currency. June gold was last up $1.70 at $1,297.50 an ounce. Spot gold was last quoted up $2.80 at $1,299.00. July Comex silver last traded up $0.022 at $19.57 an ounce.
U.S. retail sales in April rose by just 0.1%, missing the expected growth rate of 0.4%. Gold moved up from lower levels in the immediate aftermath of the report, as it falls into the camp of U.S. monetary policy doves.
The closely watched German ZEW economic expectations index was released Tuesday and saw confidence decline in May for the fifth month in a row, at 33.1 versus 43.2 in April. The German Bundesbank on Tuesday threw its support behind a likely upcoming move by the European Central Bank to ease its monetary policy. The Bundesbank is very worried about price deflation in the European Union. That news helped to sink the Euro currency and in turn boost the U.S. dollar index to a five-week high Tuesday.
The Russia-Ukraine situation has not changed much recently, as the market place views it. While tensions are still high in the region, traders and investors have become lackadaisical on the matter. Such is evident by rallying world stock markets, including U.S. indexes hitting all-time highs Monday. It will take a major new development in the situation to shake the market place out of its malaise regarding the Ukraine-Russia conflict—which is likely to occur at some point down the road.
In overnight news the Organization for Economic Cooperation and Development (OECD) reported China’s economic growth rate will continue to slow in the coming months, while other countries’ economies will see steady growth. Meantime, China’s industrial output grew by 8.7% in April, year-on-year, but was below expectations. To repeat what I’ve said many times, China’s economic numbers (if one can believe them) are still the envy of the major world economies. I suspect the bigger worry is that China’s ballooning economy comes with its financial system that is untested during the boom times. Economic history shows that booming economies are followed by busts—and as they say, the bigger they are the harder they fall.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the NFIB small business optimism index, import and export price indexes, retail sales, and manufacturing and trade inventories.
The London A.M. gold fix is $1,292.75 versus the previous P.M. fixing of $1,298.75.
(Source: KITCO)
