Gold Rises As U.S. GDP Grows By 2.6% in Q2
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(Kitco News) - Gold prices rose after the Commerce Department said that second quarter economic growth in the U.S. matched expectations.
The first estimate of second quarter gross domestic product released on Thursday showed an increase of 2.6%, after first quarter was revised down to 1.2%.
The report matched economists' expectations.
Gold prices first traded slightly lower during pre-U.S. session action, but reversed their daily losses quickly after the GDP report, with August Comex gold last trading at $1,264.10, up 0.33% on the day.
“The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and federal government spending that were partly offset by negative contributions from private residential fixed investment, private inventory investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased,” the report said.
Consumer spending contributed the most to the data. Personal consumption was up 2.8%, matching market expectations.
Chief economist at CIBC Capital Markets, Avery Shenfeld, said that the newly released figure should not trigger any significant trading moves.
“On balance, the data looked much like markets expected, and shouldn't be a source of much trading activity today,” Shenfeld said in a note.
“Economists aren't always wrong, and US Q2 GDP was one of those cases where forecasters expected moderate growth, and that's what we got. But within that slight disappointment, there was also a touch of better news, with inventories lighter than we anticipated and not contributing to the growth tally, leaving room for stockpiling to add more to Q3,” he added.
Prior to the release Kitco’s global trading director Peter Hug projected that a GDP number under 2% “would reignite dollar selling,” while a number north of 3% “should create a dollar rally and put pressure on the metals.”