Gold Caps Weekly Loss as U.S. Sales Gain Curbs Haven Demand

  • U.S. retail sales surged most in a year in April, data show
  • Gold futures head for first weekly loss since April 22

Gold posted its first weekly loss since April as U.S. retail sales pointed to an improving economy, reducing demand for the metal as a haven.

U.S. purchases at retailers rose in April by the most in a year, indicating consumer spending will help shore up economic growth after an early-year slowdown. A strengthening dollar also reduced demand for bullion as an alternative asset.

The retail sales data may strengthen the case for the Federal Reserve to raise U.S. interest rates, undercutting a driver of this year’s rally in gold. Bullion has gained 20 percent in 2016 as traders pared back expectations for the pace of monetary tightening, boosting the metal’s appeal against interest-bearing assets. Two regional Fed chiefs said Thursday the central bank risks stoking an asset bubble by delaying action for too long.

“Consumers, who drive the economy, continue to spend strongly and inflation is steady, so this data won’t push the Fed back further in their rate normalization,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in by telephone. “It could increase drag on gold, where speculators are already quite long.”

Gold futures for June delivery gained 0.1 percent to settle at $1,272.70 an ounce at 1:47 p.m. on the Comex in New York, dropping 1.6 percent for the week, the first such decline since April 22.

Holdings in bullion-backed exchange-traded products increased for a 13th day on Thursday, data compiled by Bloomberg show. Assets rose 3.7 metric tons to 1,814.7 tons, the highest since December 2013.

In other precious metals:

  • Silver futures for July delivery climbed 0.2 percent to $17.132 an ounce on the Comex
  • On the New York Mercantile Exchange, platinum and palladium declined
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