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Gold Sees Modest Drop After 2.1% Rise In Q4 GDP

Kitco News

(Kitco News) - The gold market continues to attract some profit taking, seeing muted reaction following stronger than expected 2016 fourth quarter gross domestic product data.

Thursday, the Department of Commerce said in its final estimate that fourth-quarter U.S. gross domestic product expanded by 2.1% in the fourth quarter, up from the previous estimate of 1.9%, and down from 3.5% growth reported in the third quarter. The data was slightly better than expected as Economists were forecasting growth of 2.0%.

Annual economic growth was unchanged at 1.6%, the report said.

"With this third estimate for the fourth quarter, the general picture of economic growth remains largely the same; personal consumption expenditures (PCE) increased more than previously estimated," the report said.

Overnight gold prices continued to fall as a result of technical selling as investors continue to take profits after the yellow metal hit a one-month high at the start of the week. Gold is slightly weaker following the data with April Comex contracts last trading at $1,246.60 an ounce, down 0.57% on the day.

On a positive note, the biggest revisions to fourth-quarter economic growth was an increase in consumer spending to 3.5%, up from the previous estimate of 3.0%. Economists were expecting household purchases to remain unchanged in the final reading.

However, Royce Mendes, senior economist at CIBC World Markets, said that overall the report doesn’t point to an acceleration in growth for the first quarter of 2017.

“Real final sales, though upwardly revised, were a still disappointing 1.1%. Looking ahead, our tracking estimate of first quarter GDP remains slightly below 2%, thanks largely to a deceleration in consumer spending,” he said. “All told, there are only marginal revisions here, and not much for the market to trade on.”

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