The Conversation (0)
This week’s US retail sales data indicates that consumer spending is growing, and that news sent the greenback to a four-year high. Gold stumbled due to the development, but managed to recover slightly, edging its way back to the $1,200 mark.
The yellow metal hit an intraday low of $1,146.64 after the US Commerce Department reported that retail sales in the country rose 0.5 percent in October. The data indicates that the economy is growing and that consumers are more comfortable spending. On the back of the news, the dollar hurtled to a four-year high, compounding existing perceptions that the US economy is recovering faster than that of other countries.
“We have dollar strength triggered by the stronger retail sales numbers from the United States, and on the investment side we see ongoing outflows from physically backed gold products,” Julius Baer, an analyst at Carsten Menke, told Reuters. “This is clearly an environment which is weighing on prices.”
US gold futures for December delivery fell $12.50, hitting $1,149.
Meanwhile, despite falling earlier in Friday trade, silver later rose 4.21 percent, reaching $16.28 per ounce.
On the base metals front, copper for delivery in three months on the London Metal Exchange was headed for its biggest gain in a month on Friday morning, having gained 0.6 percent to trade at $6,696 per tonne. Urging the red metal on was consumer confidence data.
Similarly, copper for March delivery on New York’s COMEX rose 0.3 percent to trade at $2.9965 per pound on Friday, though the metal still dropped for the week.
Finally, Friday saw Brent crude oil stay near its four-year low, settling at $77.04 a barrel as excess supply weighed on its price. The question of whether OPEC will decide to cut its output at an upcoming meeting was also a factor in the low price.
“Prices are in freefall,” Jonathan Barratt, chief investment officer at Ayers Alliance, told Reuters. “The market is saying OPEC won’t do anything. But nobody is talking about winter and I think that will be the turning point. A few cold snaps will be an opportunity for people to get in and hedge.”