GOLD prices pulled back on Wednesday (Jul 19) from a 1½-month high scaled in the previous session even as investors bet that recent US economic readings make the case for a pause in the Federal Reserve’s interest rate-hike stance.

Spot gold was down 0.1 per cent at US$1,978.09 per ounce by 0043 GMT, after hitting its highest since May 24 at US$1,984.19 on Tuesday.

US gold futures were flat at US$1,981.60.

The US dollar index wobbled near more than a one-year low.

US retail sales rose less than expected in June, increasing 0.2 per cent last month, against the 0.5 per cent forecasted by economists polled by Reuters. Consumer spending, however, appeared to be solid.

Economists polled by Reuters see the Fed raising its interest rate by 25 basis points to the 5.25-5.50 per cent range on Jul 26, with a majority saying it would be the last increase of the current tightening cycle.

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Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

Big US banks said on Tuesday higher interest rates helped boost profit in the second quarter, causing shares to spike, but a pullback in consumer spending, slower loan growth and increased deposit costs may cloud the outlook for the sector.

Meanwhile, confidence at big Japanese manufacturers fell in July for the first time in six months, the Reuters Tankan survey showed on Wednesday, in a sign of growing exporter concern about weakening overseas demand.

Spot silver fell 0.1 per cent to US$25.06 per ounce, platinum was up 0.2 per cent at US$984.42, while palladium fell 0.2 per cent to US$1,317.16. REUTERS