Gold has posted gains on Tuesday, erasing most of the losses which marked the Monday session. In North American trade, gold is trading at $1289.78 per ounce. On the release front, US construction numbers were a mixed bag. Building Permits improved to 1.26 million, edging above the forecast of 1.25 million. Housing Starts dropped to 1.22 million, shy of the forecast of 1.25 million.
Geopolitical jitters continue to weigh on the markets, which has been good news for safe-haven gold. North Korea has been a flash-point in recent weeks, as the war of words between the US and North Korea has escalated, with North Korea warning it will respond with a nuclear strike if attacked by the US. The crisis has triggered strong movement towards gold, which has jumped 3.4% in April. On Tuesday, US vice-president Mike Pence, who is holding talks with Japanese leaders in Japan, said that the US is committed in its support of Japan and South Korea against aggression from North Korea. If the crisis with North Korea continues, gold prices could push higher and cross the symbolic $1300 level.
US March consumer indicators, released on Friday, were softer than expected. CPI declined 0.3%, and Core CPI dropped 0.1%, as both indicators missed their estimates. Consumer spending followed suit, as Retail Sales and Core Retail Sales also missed estimates with readings of 0.2% and 0.0%, respectively. Earlier in the week, UoM Consumer Sentiment improved to 98.0, beating expectations and hitting a 3-month high.What is unusual is this data is that consumer confidence levels improved in March, yet consumer spending declined. The US consumer behavior continues to be marked by a "hard/soft discrepancy", as confidence levels ("soft data"), has not translated into actual spending numbers ("hard data"). The odds of a June rate hike from the Fed has fallen to 46%, down from 64% earlier in April. Janet Yellen & C0. will likely want to see stronger inflation numbers before pressing the rate trigger.
