Traders Returning To Gold After Disappointing U.S. Retail-Sales Report

Investors are showing a slightly increased appetite for safe-havens on Monday. Gold and SPDR Gold Trust (ETF) (NYSEARCA:GLD) are rising in European hours after gold made an slight gains in Europe. The rally in gold comes after the U.S. Department of Commerce released downbeat retail-sales figures for the month of July.

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A cut back in purchases by American consumers saw retail-sales in July remain flat, cooling from the 0.8% growth in the prior month and missing the expected growth of 0.4% that economists modeled. This inspired a spike in gold on Friday that quickly dissipated, indicating that this part of the rally may be over for now.

The disappointing retail data diminished hopes of that the Federal Reserve will raise lending rates in September. The central bank hinted that it will keep a close eye on the quality of U.S. economic data being reported for guidance on whether to maintain low interest rates or raise them at its next policy meeting. The Fed said at the end of its previous policy meeting that near-term risk on the U.S. economy had subsided.

Reduced expectations of a rate hike following tepid retail numbers hit the dollar, with the dollar index down 0.07%.

How gold prices moved

Prices of gold futures of December delivery had attained a session high of $1,347.55 a troy ounce in mid-morning trade in Europe. Earlier in the day, gold rose 0.07% in Asian trade.

Gold is rising slightly as the weaker dollar makes the yellow metal more affordable for traders holding currencies other than the greenback. The disappointing U.S. retail data has also increase global economic uncertainty and risk-averse investors are turning to safe-haven assets such as gold.

Gold rally in 2016

Gold prices have risen almost 26% so far in 2016. In the first quarter, gold prices rocketed higher amid widespread economic uncertainty, especially because of the economic slowdown in China.

But China’s economic condition remains a concern and it is a reason gold price could continue trending higher even if there is a near term pullback. July economic data from China suggested that the country would need to roll out more stimulus and easing measures to avoid falling into a recession.

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