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Gold falls to session lows after U.S. advance Q3 GDP beats expectations

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(Kitco News) - Gold prices are trading near session lows this morning after the latest data showed the U.S. economy grew above expectations, while inflation also came in hotter than the consensus.

The U.S. Bureau of Economic Analysis (BEA) announced on Thursday that the advance reading of third-quarter Gross Domestic Product showed that the economy expanded by 4.9%, which was above economists’ expectations of 4.3%, and well above the final Q2 estimate of 2.1%.

“The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment,” the report said. “Imports, which are a subtraction in the calculation of GDP, increased.”

The gold market sold off on the GDP data and is trading near session lows. Spot gold last traded at $1,977.30 an ounce after hitting a session low of $1,974.73 in the minutes following the release, and is down 0.15% on the day.

The BEA's featured measure of inflation, the price index for gross domestic purchases, came in at 3.5%, a full percentage point higher than the consensus of 2.5% and also higher than the 1.7% print in the second quarter.

The price index for personal consumption expenditures (PCE) was 2.9%, above the consensus expectation of 2.5% and the final Q2 reading of 2.1%. Excluding food and energy, the core PCE price index was 2.4%, slightly lower than the 2.5% consensus and well below the second-quarter estimate of 3.7%.

“The increase in consumer spending reflected increases in both services and goods,” the BEA added. “Within services, the leading contributors were housing and utilities, health care, financial services and insurance, and food services and accommodations. Within goods, the leading contributors to the increase were other nondurable goods (led by prescription drugs) as well as recreational goods and vehicles.”

When compared to the second quarter, “the acceleration in real GDP in the third quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment,” they said. “These movements were partly offset by a downturn in nonresidential fixed investment and a deceleration in state and local government spending.”

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