Gold advanced after data showed that U.S. retail sales unexpectedly declined last month, increasing speculation that the Federal Reserve will take more steps to shore up the world’s biggest economy.
Spot gold climbed as much as 0.4 percent to $1,596.25 an ounce, and was at $1,595 at 9:42 a.m. in Singapore. August- delivery bullion gained as much as 0.3 percent to $1,596 an ounce on the Comex in New York, and traded at $1,594.50.
Data yesterday showed U.S. retail sales dropped 0.5 percent in June, after a 0.2 percent fall in May, and compared with a 0.2 percent gain projected in a Bloomberg survey. The dollar was lower against most of its major counterparts before Fed Chairman Ben S. Bernanke testifies before Congress today and tomorrow, and addresses the outlook for growth.
“The probability of being right about new quantitative easing is growing with each poor data print,” Bart Melek, head of commodity strategy at TD Securities Inc., wrote in a note. “Gold tends to rally anytime economic data materially disappoints, with the logic being that the Fed is more likely to expand its balance sheet and other central banks are more likely to stimulate if the economy is performing badly.”
The International Monetary Fund yesterday cut its 2013 global growth forecast as Europe’s debt crisis slows expansion in emerging markets from China to India. A U.S. rebound is moderating, the fund said, predicting growth worldwide will be 3.9 percent next year, less than the 4.1 percent target in April.
Cash gold almost doubled from December 2008 to June 2011 after the Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing to stimulate the economy. Last month, the U.S. central bank expanded a program of replacing short-term bonds in its portfolio with longer-term debt.
Spot silver gained as much as 0.7 percent to $27.5325 an ounce, and traded at $27.4875. Cash platinum rose as much as 0.8 percent to $1,428.75 an ounce, and was at $1,427.25. Palladium advanced as much as 0.9 percent to $582.25 an ounce, and was at $581.75.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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