(Kitco News) - The gold market is trading near its session lows, struggling to find any bullish traction following data showing that the U.S. economy continues to expand, albeit at a slower pace.
The second reading of the U.S. Gross Domestic Product showed the economy growing by 2.3% in the final quarter of 2024, the Bureau of Economic Analysis announced Thursday. The data was unchanged from the first reading and in line with economists' expectations.
However, the report also noted that inflation pressures continue to rise. The preliminary GDP Price Index rose 2.4%, up sharply from the initial estimate of 2.2%. Economists were expecting to see an unchanged reading.
At the same time, core PCE for the quarter, which strips out goods and energy prices, increased 2.7%; economists were expecting to see an increase of 2.5%.
The gold market was already seeing some solid selling pressure ahead of the report, and the trend hasn’t shifted in the initial reaction. Spot gold last traded at $2,884.20 an ounce, down 1% on the day.
Although inflation pressures continue to rise, the report notes that consumers continue to spend, with consumption rising 4.2% in the fourth quarter, unchanged from the initial estimate.
According to some economists, the latest GDP data will put further pressure on the Federal Reserve as it tries to support a balance between the labor market and inflation.
The central bank has been clear that it is in no hurry to raise interest rates as inflation risks start to rise. This could have a short-term impact on gold as the Federal Reserve’s neutral stance could support the U.S. dollar.
