Stronger data from US, but sharemarket and metals aren’t reflecting

16 August, 2023

As at 9am, AEST

Gold Spot Price $AU2950 

Silver Spot Price $AU35.05 

Platinum Spot Price $AU1393

In a strange twist, stronger retail sales data and optimistic metrics on inflation have given pause to the US500 (and ASX200). Where previously bad news equals sharemarket take-off, currently good news seems to be causing concern amongst investors.

Gold and Silver pricing continued to weaken, on the back of better than expected economic news and also slightly weaker Oil prices. Gold is hovering around US$1900 and Silver is now finding resistance below its 200MDA at $US22.50.

To grasp the enormity of the great news, the Atlanta Fed Reserve has predicted the US GDP will grow at an impressive 5% pace annualised this quarter. This is on the back of higher than normal interest rates causing the majority of mortgage holders to cut excessive spending.

We’ve touched against this previously but will bring up again today - the anomaly that has allowed the majority of an entire generation of people (Baby Boomers) to retire on saved money. This generation also generally own their home outright, so don’t carry any mortgage debt. With retail sales exploding through the US, it is safe to assume that this generation is driving these sales - and they probably won’t slow down. Approaching or in retirement, this generation is also looking to relax and enjoy life; a goal we all have for retirement. So spending (retail) is on the agenda.

Flipside, the debt encumbered or stereotypically Gen X and Millennials have taken on high value loans, with higher than normal interest rates and on average another 15-20 years remaining to pay these loans down. This generation has tightened the belt and has reduced their spending across most retail activities. Gen Z (born 1995-2009) are yet to become mortgage holders, and as such have maintained their retail spend, albeit adjusted to meet increased rents and cost of living pressure.

Continued strong retail sales also reinforce the US FEDs optimistic scenario of a ‘soft landing’ for the economy rather than a hard crash from interest rate rises. As retail sales cushion this fall, we can all be a little grateful for both the Baby Boomers and Gen Z for their ongoing retail spend.

Here’s today’s pricing charts.

Gold daily, with 200MDA

Silver daily, with 200MDA