(Kitco News) - The U.S. economy continues to defy the odds, as the nation’s Gross Domestic Product (GDP) experienced solid growth in the second quarter. However, despite this positive economic data, gold prices remain largely unaffected, with the market continuing to consolidate near record levels.
On Thursday, the Bureau of Economic Analysis reported that the preliminary reading of second-quarter GDP showed the economy grew by 3.0% between April and June, up from the initial estimate of 2.8%. This represents an increase from the 1.4% growth reported in the first quarter.
"The increase in real GDP primarily reflected growth in consumer spending, private inventory investment, and nonresidential fixed investment. Imports, which are subtracted in the calculation of GDP, also increased," the report stated. "Compared to the first quarter, the acceleration in real GDP during the second quarter was mainly driven by an upturn in private inventory investment and an acceleration in consumer spending. These gains were partially offset by a downturn in residential fixed investment."
Despite the better-than-expected economic data, gold prices remain largely unaffected. December gold futures last traded at $2,543.20 an ounce, up 0.21% on the day.
In addition to solid economic growth, the report presents mixed inflation data. The GDP Price Index rose 2.5% in the second quarter, up from the initial estimate of 2.3%. However, the report also noted that the core Personal Consumption Expenditures (PCE) Price Index increased by 2.8%, down from the initial estimate of 2.9%.
Persistent price pressures have had little impact on consumer spending, as the report highlighted a further rise in consumption. Consumer spending increased by 2.9% in the second quarter, up from the 2.0% reported in the initial reading.
Adam Button, Head of Currency Strategy at Forexlive.com, suggested that the latest GDP report could provide some support for the U.S. dollar, which might, in turn, exert pressure on gold.
"Q2 is in the rearview mirror now, but this shows that the economy was as strong as many companies reporting earnings indicated," he said. "GDP was higher, and consumer spending was stronger. It's hard to imagine a 50 bps cut with this data."
