Gold prices edged higher as U.S. retail sales dropped for the first time in seven months in September, generating concerns that a slowdown in the American manufacturing sector could be beginning to infect the consumer side of the economy.
On Wednesday the Commerce Department released data showing that retail sales dropped 0.3% last month as households cut spending on building materials, online purchases and especially automobiles. The drop was the first one since February.
“While this is by no means conclusive evidence that the consumer is wavering (after all, the upward revisions reduce the impact of September’s declines), it nonetheless reinforces our ongoing concern that a spending retrenchment will ultimately trigger a more durable slowdown,” wrote Ian Lyngen, head of rates research at BMO Capital Markets.
While at one point they were as low as $1,478 an ounce, gold prices ended higher on Wednesday, closing above $1,490 per ounce, as investors watched global political news surrounding trade and Brexit, and reacted to a weaker-than-expected reading of U.S. retail sales, which spurred some haven buying.
ETF buying was solid as well, as GraniteShares Gold Trust (BAR) and the SPDR Gold MiniShares Trust (GLDM) were up over 0.5% each.
Moves for the precious metal resulted as investors looked to protection from Brexit uncertainties, concerns over Turkey, the Middle East, U.S. politics and the global economic outlook, as well as on mistrust tied to the continued tariff talks with China, said George Gero, managing director, at RBC Wealth Management, in a daily note.
While technical analysis suggests that gold may have some downside or stagnation ahead, analysts nevertheless see continued desire for the precious metal.
“From a technical point of view, we are in a sideways phase even though the short-term trend appears negative as the highs seen in the last two months are declining ($1,550 – $1,533 – $1,520),” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a daily research report.
“Meanwhile, buyers have managed so far to maintain the price above $1,470, holding off any sharp declines and demonstrating that there remains some appetite for the yellow metal,” he wrote Wednesday.
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