Gold Gains as Slower U.S. Retail Sales Fuel Bets on Fed Stimulus

Gold gained for the fifth time in six sessions in New York as U.S. retail sales rose less than expected in June, boosting speculation the Federal Reserve will maintain stimulus measures to shore up economic growth.

Retail sales climbed 0.4 percent, half the median forecast in a Bloomberg survey of economists, government figures showed today. Sales were unchanged excluding the biggest jump in automobile purchases since November. Bullion futures rose 5.4 percent last week, the most since October 2011, after Fed Chairman Ben S. Bernanke said highly accommodative monetary policy is still required for the foreseeable future.

“Since Bernanke’s speech, there’s been more of a question mark as to when the Fed begins tapering stimulus,” David Meger, the director of metal trading at Vision Financial Markets in Chicago, said in a telephone interview. “We’re back to a data-dependent mentality, and anything that shows a weaker economy is going to be supportive.”

Gold futures for August delivery rose 0.5 percent to settle at $1,283.50 an ounce at 1:39 p.m. on the Comex in New York.

Prices have fallen 23 percent this year, wiping $59.8 billion from the value of gold exchange-traded products, after some investors lost faith in the metal as a store of value as the Fed indicated it may slow the stimulus.

Gold ETP holdings were at 1,986.2 metric tons on July 12 and reached 1,983.6 tons last week, the lowest since May 2010, according to Bloomberg data. The Fed buys $85 billion of Treasuries and mortgage debt each month as part of its quantitative-easing program.

Silver futures for September delivery added 0.2 percent to $19.839 an ounce in New York. Trading was 55 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.

On the New York Mercantile Exchange, platinum futures for October delivery rose 1 percent to $1,421.40 an ounce. Palladium futures for September delivery gained 1.3 percent to $732.15 an ounce, the sixth straight advance and the longest rally since October.

To contact the reporters on this story: Joe Richter in New York at jrichter1@bloomberg.net;

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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