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Gold Prices Slip as Strong U.S. Data Dent Haven Demand

By Geoffrey Smith

Investing.com -- Gold prices remained on the defensive on Thursday as a solid retail sales report in the U.S. and an upbeat regional business survey from the Philadelphia Federal Reserve.

Together with a report from the National Association of Home Builders showing confidence still close to a 20-year high, the data painted a picture of an economy still cruising as election year kicks off. That reduces the chance of further interest rate cuts from the Federal Reserve, which traditionally support gold prices.

By 10:55 AM ET (1555 GMT), gold futures for delivery on the New York COMEX exchange were down 0.2% at $1,550.75 a troy ounce. Spot gold was down by 0.4% at $1,550.45 an ounce.

Figures released by the Commerce Department showed retail sales rose a solid 0.3% in December, in line with forecasts. That dispelled concerns raised by an uncharacteristically disappointing sales update from big box retailer Target (NYSE:TGT) on Wednesday.

Core retail sales rose by an even stronger 0.5%, although the previous month’s reading was revised down a shade.

Later, the Philly Fed’s regional manufacturing index surged to 17.0, its highest level since July and well ahead of forecasts for a reading of 3.8.

Liz Ann Sonders, chief investment strategist, said via Twitter that the survey showed a surge in new orders and employment.

There were, however, signs of monetary easing further afield. Turkey cut its key interest rate by another 75 basis points to 11.25%. Importantly for those considering the trade-off between gold and interest-rate products such as bonds and deposits, that takes the Turkish key rate below the rate of inflation.

The South African Reserve Bank also cut its prime rate by 25 basis points as it continued to grapple with an economic slowdown and an ongoing debt crisis at power company Eskom.

European government bonds, which have registered record high interest at auctions this week, were mixed.

Elsewhere in precious metals, silver futures fell 0.3% to $17.93 an ounce, while platinum futures fell 1.5% to $1,010.30, retracing some of Wednesday’s gains.

Copper, which had rallied in anticipation of the U.S.-China trade truce being signed, fell 0.2% to $2.86 a pound, a level it has been effectively stuck at all week. A brief breakout to $2.88 earlier quickly ran into profit-taking.

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