Gold Nears $1,300 on Weak Retail Sales Report

Wall St. Cheat Sheet

On Monday, gold (NYSEARCA:GLD) futures for August delivery, the most active contract, increased $5.90 to close at $1,283.50 per ounce, while silver (NYSEARCA:SLV) futures for September edged 5 cents higher to finish at $19.84.

Both precious metals found buying support as more signs point towards a weak economy. According to the Department of Commerce, retail sales increased only 0.4 percent in June to a seasonally adjusted $422.79 billion. Economists expected a 0.8 percent jump to follow May’s 0.6 percent increase.

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As evidence that Americans are keeping purchases constrained to their immediate needs, receipts at restaurants and bars dropped 1.2 percent in June, the biggest decline since February 2008. In addition, sales fell 2.2 percent at building materials outlets — the most since May 2012. Department store sales decreased 1 percent.

After the retail sales report, Goldman Sachs cut its second-quarter gross domestic product estimate to 1 percent, down from 1.3 percent. Last week, JPMorgan Chase also reduced its GDP estimate for the second quarter to 1 percent. The slow growth environment has built expectations for the Federal Reserve to keep interest rates low for the foreseeable future.

In afternoon trading, shares of the SPDR Gold Trust (NYSEARCA:GLD) and iShares Silver Trust (NYSEARCA:SLV) were both relatively flat. Gold miners (NYSEARCA:GDX), such as Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY), climbed slightly higher.

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Shares of Endeavour Silver (NYSE:EXK) surged nearly 9 percent. The miner adjusted second-quarter results, and showed revenue to be 12 percent higher than initially thought, due to the “marking to market of certain concentrate sales that had already received final pricing during the quarter.”

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Disclosure: Long EXK, AG, HL, PHYS

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