Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold jumped 2.2% to close at a six-week high above $1,218 after another wave of subpar economic data diminished the likelihood of higher interest rates in the near future.

The Commerce Department reported that retail sales were flat in April, falling below forecasts, as more Americans cut back on purchasing cars and other big-ticket items. With consumer spending accounting for nearly 70% of GDP, the weaker-than-expected retail data lessens hopes that the economy will rebound significantly in the second quarter after contracting in the first.

In a separate release, the BLS reported that import prices fell for the tenth straight month, declining another 0.3% in April after falling 0.2% in March and 0.4% in February. Falling import prices exert downward pressure on inflation, something that deeply concerns the Fed as it struggles to prevent deflation and rekindle growth through accomodative monetary policies like near-zero interest rates.

The dollar fell on the weaker data, with the ICE Dollar Index hitting a three-month low as speculation grows that weak growth and low inflation will disable the Fed from raising interest rates before September at the earliest. A cheaper dollar boosts gold and other commodities by making them less expensive overseas.

The other precious metals tracked higher alongside gold. Silver surged 4.2% to its highest close since mid-February while platinum and palladium gained 1.6% and 0.5%, respectively.

At the Comex close: June gold jumped $25.80 to $1,218.20; July silver surged 69 cents to $17.22; July platinum gained $17.80 to $1,150.80; and June palladium added $4.25, to $789.40 an ounce.