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Gold bugs might have reason to expect further gains after gold prices surged Wednesday on lackluster U.S. data.

Disappointing retail sales weighed down on the U.S. dollar this week, as the markets contemplated the possibility that a Federal Reserve rate hike may not happen as soon as expected. With the dollar lower, bullion rallied 2 percent on Wednesday and now trades back above the $1,200 mark.

"The main catalyst was the retail sales slumping," said Phillip Streible, senior market strategist at RJO Futures. "It disappointed a wide audience. Because of that, a rush was back into gold as the dollar sold off hard. It looks like [we] won't see a rate increase in the immediate future."

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Streible's view on rates is echoed by Erin Gibbs, equity chief investment officer at S&P Investment Advisory Services.

"The consensus is that the Federal Reserve won't raise rates before September at the earliest," said Gibbs, who has $16 billion in assets under advisory. "Low U.S. [rates of] interest is good for gold, which is an alternative asset class investment when other assets such as low yield-bearing debt look less attractive."

But Larry McDonald, head of U.S. strategy at Societe Generale, sees gold's latest move to be a mere blip in its long-term downtrend.

"It's a classic gold rally within a bear market," said McDonald. "We've had 16 of these since 2011."

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