US retail sales
US consumer spending makes up close to two-thirds of the US economy. So any indicator pointing to an uptick in spending is positive for US economic growth. Retail sales, which account for about a third of all consumer spending, increased by 1.2% for May, seasonally adjusted month-over-month. This marks the third straight month of increase.
Sales figures for both April and March have also been revised upward to show a 0.2% and 1.5% rise, respectively. The rate in March was the highest in five years.
Core retail sales
Core US retail sales, which exclude automobiles, gasoline, building materials, and food services, rose 0.7% in May after rising 0.1% in April. Core retail sales figures are used to calculate consumer spending, which determines economic output. A rise in core retail sales shows that the consumer spending input in the calculation of GDP (gross domestic product) should help prop up economic growth.
Growth in retail sales in May is positive for ETFs such as the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Consumer Staples Select Sector SPDR Fund (XLP). It also points to firming US economic growth in the second quarter after a sluggish first quarter.
Increasing US retail sales are positive for the economy. This reflects improving labor markets and could point to steadying inflation. All these factors are favorable for a rate hike by the Fed, which in turn would be negative for non-income–yielding gold. This would also be negative for gold prices (GLD) and gold stocks such as Hecla Mining (HL), Harmony Gold (HMY), and Royal Gold (RGLD).