Gold Futures Rise to Two-Week High on Stalling U.S. Retail Sales

New York (May 13)  Gold rose to a two-week high as stalling U.S. retail sales revived speculation that a sputtering economy will spur the Federal Reserve to delay raising interest rates.

Consumer purchases were little changed in April as Americans remained reluctant to splurge, Commerce Department figures showed Wednesday. The clouding economic outlook increases the chances that the Fed will waiting longer before increasing rates for the first time in almost a decade.

Gold declined in the past three months as the dollar rallied amid an improving labor market, raising concern that policy makers could boost borrowing costs as soon as at their June meeting. Higher rates drive investors to favor assets that pay interest, including new bonds, curbing the appeal of the metal, which generally offers returns only through price gains.

“Those retail sales numbers in April were poorer than expected,” Tai Wong, the director of commodity products trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “Gold should have a decent start on this, because the market may now start to reconsider if even September will be a sure thing for a rate hike.”

Gold futures for June delivery rose 1.8 percent to $1,213.40 an ounce at 10:12 a.m. on the Comex in New York. Earlier, the price reached $1,214.60, the highest for a most-active contract since April 28.

The metal climbed this week as rising energy costs stoked inflation concerns. Crude-oil futures in New York have jumped 46 percent from a six-year low in March. Gold has traditionally been used as a hedge against accelerating consumer prices.

ETPs Gain

On Tuesday, holdings in exchange-traded products backed by gold increased 1.3 metric tons to 1,616 metric tons, according to data compiled by Bloomberg. Assets dropped in the previous four sessions.

Silver futures for July delivery jumped 3.7 percent to $17.135 an ounce on the Comex. The price reached $17.175, the highest in five


Source: Bloomberg