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Gold Prices Nearly Flat As U.S. Q3 GDP Expands 3.5%

Kitco News

(Kitco News) - The gold market remains on the back foot, struggling to make gains despite little change in an update reading of the U.S. economy.

Wednesday, the second preliminary reading of U.S. Gross Domestic Product showed that the economy grew 3.5% in the third quarter, unchanged from the previous estimate. The headline numbers were slightly weaker than expected as consensus forecasts were calling for an increase to 3.6%.

U.S. economic data is having little impact on gold prices, as the market continues to be dominated by U.S. Dollar momentum. December gold futures last traded at $1,213.30 an ounce, nearly flat on the day.

Looking at some of the components of the report, personal consumption was weaker than expected, growing 3.6% in the third quarter, compared to a 4.0% increase in the previous reading. Economists were expecting to see little change in consumer spending, which is a significant driver of the economy.

Trade was also weighed on economic growth with exports falling 4.4% in the third quarter; meanwhile imports were relatively unchanged at 9.2%.

The report said that inventories grew larger than expected increasing by $86.6 billion, compared to the initial estimate of $76.3 billion. However, economists note that this could be a negative sign for future growth.

“The huge jump in inventories is worrisome because it could be a sign of massive imports and stockpiling ahead of US tariffs,” said Adam Button, senior currency strategist at If that's the case then it will unwind in the months ahead.

The data didn’t show much good news for the gold market as inflation remains relatively tame. The report said that the GDP Price Index increased 1.7% in the third quarter, in line with expectations and unchanged from the initial reading.

Core Personal Consumption Expenditures Index, which strips out volatile food and energy costs, increased 1.5% in the third quarter, down from the initial estimate of 1.6%. Economists were expecting to see a unchanged reading in core inflation.

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