Gold Futures Prices Erased Losses After U.S. Retail Sales Disappoint

Gold Futures Prices Erased Losses After U.S. Retail Sales Disappoint

Prices of gold futures deleted the losses on Tuesday after US retail sales data showed an unexpected drop in June, while core sales have also lost estimates, damping optimism about the economic strength and outlook for U.S. higher interest rates.

On the Comex Gold futures for August delivery tacked on $1.10, or 0.1%, to trade at $1,156.50 a troy ounce.

Gold merchants were reluctant to take action before the testimony this week from Janet Yellen that can provide further details on the timing of increases in interest rates in the United States.

Last week, the Fed chairman Yellen said that the central bank is on course to raise interest rates at some later this year, but cautioned against weakness in the labor market.

The United States Department of Commerce, said retail sales fell by a seasonally adjusted 0.3% last month, on disappointing expectations for a profit of 0.2% after a 1.0% increase in May.

Underlying retail sales, that exclude sales of cars, fell by a seasonally adjusted 0.1% in June, compared with estimates for a rise of 0.5% after rising 0.8% in the previous month.

The weak report stoked health concerns of the American economy and wetted expectations of higher interest rates.

With reached agreement on Greek debt, investors are switching back to focus on higher US rates, which to slow down the attraction of precious metal because it does not pay interest or provide other income assets such as bonds and stocks. Gold has fallen by around 2 percent this year as the economy gains prompted the case for decision makers to tighten monetary policy.

Investors raised holdings in gold-backed exchange-traded products for the first time in four sessions, according to data compiled by Bloomberg. Total assets grew 1.7 metric tons to 1586.9 tons as of Monday, which is close to the lowest levels since 2009 yet.

Also on Tuesday, at the Multi Commodity Exchange, Gold prices were trading lower. MCX Gold October contract was trading at Rs 26219 down Rs 40, or 0.15 percent.

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