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Gold price remains below $1,850 as U.S. GDP contracts 1.5% in Q1

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(Kitco News) - The gold market remains under pressure, seeing no major buying momentum as the U.S. economy lost more ground than expected in the first quarter.

Thursday, Commerce Department said in its preliminary reading that U.S. Q1 GDP fell 1.5% versus markets' expectation of a contraction of 1.3%. This is the second estimate of U.S. GDP; the initial assessment showed the economy contracting by 1.4%.

The gold market is not seeing much reaction to the disappointing economic data. June gold futures last traded at $1,842.10 an ounce, down 0.23% on the day. Market analysts have said that gold prices need to hold gains above $1,850 an ounce to start attracting consistent buying interest.

Economists have noted that trade imbalances continue to weigh on economic growth. According to the report, net trade cut 3.23% from first-quarter GDP, roughly unchanged from the initial estimate.

"The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased," the report said.

Economists continued to highlight strong personal consumption. The report said that personal consumption rose 3.1%, up from the initial estimate of 2.7%.

However, inflation pressures remain elevated and threaten consumer spending power. The report said that the core Personal Consumption Expenditures Index rose 5.1%, down slightly from the initial estimate of 5.2%.

Headline inflation for the first quarter rose 8.1%, up slightly from the initial estimate of 8.0%.

Wednesday, the Federal Reserve, in the minutes from May's monetary policy meeting, said that it sees upside risks to inflation and is committed to price stability as it erodes personal wealth.

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