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Price of Gold Fundamental Daily Forecast – Strong US Economic Data Sinks Gold

U.S. retail sales increased for a third straight month in December. Data showed the number of Americans filing claims for unemployment benefits dropped for a fifth straight week last week. A gauge of manufacturing activity in the U.S. Mid-Atlantic region rebounded in January to its highest level in eight months.
James Hyerczyk

Gold futures are trading lower on Thursday shortly after the regular session opening after an earlier attempt at a rally failed to draw in enough buyers to extend the move. The market was pressured by firmer Treasury yields, a rebound in the U.S. Dollar and another move to record highs by U.S. equity markets.

At 15:49 GMT, February Comex gold futures are trading $1550.00, down $4.00 or -0.25%.

Gold prices fell after the U.S. reported stronger-than-expected Core Retail Sales and better-than-expected Weekly Unemployment Claims. The Philadelphia Fed Manufacturing Index also came in well above expectations.

The news suggests the economy is on solid ground and the Fed is not likely to change policy at its next meeting. Bullish gold traders were hoping that weak data would increase the chances of a Fed rate cut.

U.S. Retail Sales Report

U.S. retail sales increased for a third straight month in December, with households buying a range of goods even as they cut back on purchases of motor vehicles, suggesting the economy maintained a moderate growth pace at the end of 2019.

The Commerce Department said retail sales increased 0.3% last month. Data for November was revised to show retail sales gaining 0.3% instead of rising 0.2% as previously reported.

Economists polled by Reuters had forecast retail sales would gain 0.3% in December. Compared to December last year, retail sales accelerated 5.8%. Sales increased 3.6% in 2019.

Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 0.5% last month after falling by a downwardly revised 0.1% in November.

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Weekly Unemployment Claims

Data showed the number of Americans filing claims for unemployment benefits dropped for a fifth straight week last week, indicating the labor market remained strong despite a recent slowdown in job growth. Analysts said that the number should help sustain consumer spending and probably keep the longest economic expansion on record, now in its 11th year, on track.

Though a report last week showed a slowdown in job growth in December and the increase in the annual wage gain retreating to below 3.0%, the labor market remains on solid footing. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 204,000 for the week ended January 11. Economists had forecast claims would rise to 216,000 in the latest week.

Philly Fed Report Shows Factory Activity Accelerated in Mid-Atlantic Region

A gauge of manufacturing activity in the U.S. Mid-Atlantic region rebounded in January to its highest level in eight months and the outlook is the brightest in more than a year and a half, the Federal Reserve Bank of Philadelphia said on Thursday.

The regional Fed bank’s business conditions index rose to 17.0 from an upwardly revised 2.4 in December. That easily topped expectations for a reading of 3.8 in January, according to a Reuters poll of economists.

The six-month outlook rose to 38.4, the highest since May 2018, from 34.8 last month. The new orders, employment and prices paid indexes all showed improvement.

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