Bullion prices ended mixed at Comex on Tuesday, 16 July 2019. Gold ended lower on Tuesday as a rise in U.S. retail sales contributed to a stronger U.S. dollar, pressuring prices for the precious metal. The upbeat retail sales number, however, also lifted prices for silver, brightening the metal's industrial demand prospects. Silver gained.
August gold trading on Comex fell $2.30, or 0.2%, to settle at $1,411.20 an ounce. September silver meanwhile, picked up 31.1 cents, or 2%, to $15.678 an ounce, the highest finish for a most-active contract since late February.
The move for gold, however, comes as the dollar strengthened, advancing 0.5%, as gauged by the ICE U.S. Dollar Index. A stronger dollar tens to be a negative for commodities priced in the unit, making them relatively more expensive to users of other currencies.
Federal Reserve Chairman Jerome Powell, in testimony before House and Senate lawmakers over two days last week, offered no pushback to market expectations for a rate move when policy makers meet July 30-31. Lower rates are bullish for gold because it diminishes the competition between investing in the perceived safety of sovereign debt and bullion.
Among economic data Tuesday, U.S. retail sales data revealed a 0.4% rise in June, but the cost of imported goods in June fell by 0.9%, the steepest amount in six months, while industrial production last month was flat.
Total retail sales were up 0.4% over the month in June (consensus +0.2%) following a downwardly revised 0.4% increase (from +0.5%) in May. Retail sales, excluding autos, were also up 0.4% (consensus +0.2%) following a downwardly revised 0.4% increase (from +0.5%) in May. Core retail sales, which exclude motor vehicle, gasoline station, building materials, and food services and drinking places sales, jumped 0.7% over the month. The key takeaway from the report is that it was a solid report overall and will diminish the prospect of a 50-basis points cut at the July 30-31 FOMC meeting.
Import prices declined 0.9% over the month following an upwardly revised unchanged reading (from -0.3%) for May. Excluding fuel, import prices were down 0.3% for the second straight month. Export prices declined 0.7% over the month and were down 1.1% excluding agricultural exports.
Industrial production was unchanged in June (consensus +0.2%) after increasing an unrevised 0.4% in May. The total industry capacity utilization rate fell to 77.9% (consensus 78.2%) from an unrevised 78.1% in May. The key takeaway from the report is that factory production declined at an annual rate of 2.2% in the second quarter, which was roughly the same pace as in the first quarter.
Business inventories increased 0.3% in May (consensus 0.4%) following an unrevised 0.5% increase in April. Business sales increased 0.2% after declining an unrevised 0.2% in April.
Separately, the NAHB Housing Market Index for July came in at 65 (consensus 62), up from 64 from June.
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