Gold has risen in price by a percentage amid falling European shares, but then lost almost all positions due to the significant strengthening of the US dollar.
The dollar had on the US data pointed to the improvement of the economic situation in the country. The Commerce Department reported that retail sales in April recorded their biggest gain in a year, as the Americans have stepped up purchases of cars and a number of other goods. Retail sales rose 1.3 percent last month. The data for March were revised, and showed a decline of 0.3 percent instead of falling 0.4 percent previously reported. Excluding cars, gasoline and building materials and services to the food, retail sales jumped 0.9 percent last month after a revised towards strengthening 0.2 percent in March. Economists had forecast retail sales growth of 0.7 percent and core retail sales by 0.3 percent last month. Recall, the economy grew by 1.4 percent in the fourth quarter.
The decline in gold prices is also due to the recent statements by the Fed that the Fed should raise rates if the data point to an improving economy. Boston Fed President Eric Rosengren said that he expects the US economy to accelerate growth in the 2nd quarter of this year, which should provide conditions for new Fed raises interest rates. However, Rosengren did not comment on their expected timing of the next rate hike. He again warned that financial markets are likely to underestimate the number of probable interest rate hikes by the central bank.
Meanwhile, the president of the Federal Reserve Bank of Kansas City, Esther George said that interest rates are at very low levels, given that the economy is close to full employment, and inflation close to the target level of the Central Bank is 2%. George also said that maintaining interest rates at extremely low levels creates negative conditions in the economy.
In addition, it became known that the gold reserves in the largest gold ETF-SPDR Gold Trust fund amounted to 27.17 million on Thursday. Ounces, which is the highest value since November 2013.
Since the beginning of the year the price of gold has increased by 20 per cent against the backdrop of the US series of weak economic data, and other countries, which have reduced the likelihood of the Fed raising interest rates in the short term. Recall, higher interest rates have a downward pressure on the price of gold, which brings its holders to interest income and that is difficult to compete with the assets, bringing that income against the background of increasing interest rates.
The cost of the June gold futures on the COMEX rose to $ 1272.7 per ounce.
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