Gold Futures Drop to 2-Week Low on Interest-Rate Outlook

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Gold futures fell to the lowest in almost two weeks on speculation that a smaller-than-expected gain in U.S. retail sales won’t be enough to keep the Federal Reserve from raising interest rates this year.

Purchases at U.S. retailers increased 0.9 percent, the first gain in four months, after a 0.5 percent drop in February, government figures showed Tuesday. The median forecast of 87 economists surveyed by Bloomberg called for a 1.1 percent advance.

Gold has dropped for five of the past six sessions amid concern that policy makers are still moving closer to boosting borrowing costs after a first-quarter slowdown mainly caused by unusually harsh winter weather. Rising rates curb gold’s appeal because the metal generally only offers returns through price gains, prompting investors to favor assets with better yield prospects such as equities and bonds.

“With the Fed seen on the cusp of hikes sometime this year, any data released can be seen impacting the path to a rate hike,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “The somewhat weaker-than-expected numbers produced a quick pop in gold, but may not be enough to fuel a sustained rally.”

Gold futures for June delivery fell 0.6 percent to settle at $1,192.60 an ounce at 1:48 p.m. on the Comex in New York, after reaching $1,183.50, the lowest since April 1.

Silver futures for May delivery declined 0.8 percent to $16.161 an ounce on the Comex, also the fifth loss in six sessions.

Platinum futures for July delivery slid less than 0.1 percent to $1,153.70 an ounce on the New York Mercantile Exchange. Palladium futures for June delivery dropped 1.2 percent to $762.50 an ounce.

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