(Kitco News) - The gold market is holding on to solid gains but is largely ignoring stable economic activity, as the first quarter's gross domestic product expanded in line with expectations.
Thursday, the Bureau of Economic Analysis said the third and final reading of Q1 GDP showed that the economy grew 1.4% in the first three months of the new year, up from the second estimate of 1.3%.
“The upward revision primarily reflected a downward revision to imports, which are a subtraction in the calculation of GDP, and upward revisions to nonresidential fixed investment and government spending. These revisions were partly offset by a downward revision to consumer spending,” the report said.
Activity overall is down from 3.4% growth seen in the final three months of 2023.
The gold market is seeing little reaction to the benign data. August gold futures last traded at $2,331.20 an ounce, up 0.78% on the day.
While economic growth is relatively stable, economists note that cracks are starting to appear as consumers start to struggle. Personal consumption was revised down to 1.5% from 2.0% in the previous estimate.
“The full implications for the second quarter of those revisions to consumer spending and prices won’t become clear until we have the monthly breakdown available tomorrow morning,” said Thomas Ryan, North America Economist at Capital Economics, in a note. “Nevertheless, with first-quarter real personal disposable income growth also revised down, by 0.6% points to only 1.3%, this adds to the evidence that consumers are now struggling a little more under the weight of higher rates and prices.”
However, some economists also note that the data doesn’t have much market impact because it is very data as the end of the second quarter approaches.
