(Kitco News) - The gold market continues to hold its ground above $3,700 an ounce, even as it sees some selling pressure after U.S. GDP growth for the second quarter was revised significantly higher.
The third and final reading of the second-quarter U.S. Gross Domestic Product showed the economy grew 3.8% between April and June, an improvement from the previous estimate of 3.3% growth.
The data came in better than expected, as economists had forecast GDP growth to remain unchanged from the second estimate.
“The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending. These movements were partly offset by decreases in investment and exports,” the report said.
The gold market was trading in positive territory ahead of the report but has seen further losses in its initial reaction to the stronger data. Spot gold last traded at $3,735.30 an ounce, unchanged on the day.
Along with the positive headline number, the report noted solid improvement in U.S. consumption, which increased 2.5%, up sharply from the previous estimate of 1.6%.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, noted that at 3.8%, economic activity continues to outpace elevated inflation.
However, in a positive note for gold, Zaccarelli said he doesn’t expect the improving economic data to provide much momentum for U.S. equity markets.
“We agree that the economy is strong and growing, and we have been impressed with corporations’ ability to navigate a challenging environment and produce strong results, but a lot of that good news is already priced in – and then some. If we see some volatility in the near term (which we believe is a strong possibility), it will be because we are starting with much higher-than-average valuations, leaving little room for error,” he said in a note.
