Gold hastens retreat as dollar rallies on U.S. retail surprise

New York (Sept 16) - Gold shed as much as 3% on Thursday and silver plunged 5% as strong U.S. retail sales data pushed up the dollar and gave more ammunition to bets that the Federal Reserve may hasten its tapering.

Spot gold slid 2.3% to $1,752.26 per ounce by 10:07 am EDT (1407 GMT), after hitting a more than one-month low of $1,744.30.

U.S. gold futures fell 2.3% to $1,752.70.

Caught in gold's slipstream, silver plunged as much as 5% and was last down 4.5% to $22.75.

Hammering gold's appeal to holders of other currencies, the dollar index jumped after data showed an unexpected increase in U.S. retail sales in August.

"It's just a bad day for gold ... it couldn't get back over $1,800 yesterday, setting up the large downward (move)," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The better-than-expected numbers show "consumer sentiment is starting to come back, a good indicator for the Fed to bring in those expectations on the next rate hike."

Gold also found little respite from overall labour market sluggishness -- considered a key economic barometer by the Fed, with initial jobless claims coming in slightly higher than expected last week.

Focus now turns to the Fed's Sept. 21-22 meeting.

"There are a lot of members in the FOMC in favour of commencing tapering this year and therefore the outlook for gold is not positive," said Quantitative Commodity Research analyst Peter Fertig.

Unwinding of economic support measures not only dim gold's status as a safe haven -- burnished by the pandemic -- but a subsequent hike in interest rates translates to the increased opportunity cost of holding non-yielding assets like bullion.

Platinum fell 1.4% to $933.73 per ounce, while palladium was the sole gainer in the precious complex, rising 1% to $2,021.07.

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