(Kitco News) - Gold prices are coming off session highs this morning after the latest data showed the U.S. economy grew above expectations, while consumers decreased their spending from the earlier estimate.
The U.S. Bureau of Economic Analysis (BEA) announced on Thursday that the final reading of third-quarter Gross Domestic Product showed that the economy expanded by 4.4%, slightly better than economists’ expectations and the second estimate of 4.3%. Final Q2 GDP growth was 3.8%.
“The increase in real GDP in the third quarter reflected increases in consumer spending, exports, government spending, and investment,” the report said. “Imports, which are a subtraction in the calculation of GDP, decreased.”
The 0.1% increase from the initial estimate was “primarily reflecting upward revisions to exports and investment that were partly offset by a downward revision to consumer spending,” the BEA added. “Imports were revised up.”
The gold market came down from session highs following the GDP data. Spot gold last traded at $4,813.33 per ounce, down 0.37% on the day.
“Compared to the second quarter, the acceleration in real GDP in the third quarter reflected upturns in investment, exports, and government spending, as well as an acceleration in consumer spending,” the report said. “Imports decreased less in the third quarter than in the second.”
“The price index for gross domestic purchases increased 3.4 percent in the third quarter, the same as previously estimated,” the BEA noted. “The personal consumption expenditures (PCE) price index increased 2.8 percent, and the PCE price index excluding food and energy increased 2.9 percent, both the same as previously estimated.”
Mazen Salhab, Head of Market Research at MH Markets, told Kitco News that the modest upward revision to 4.4% provides a mild tailwind for the USD.
"This could support further dollar gains versus majors like EUR and GBP in the near term, as it marginally reduces expectations for near-term Fed easing and bolsters yield differentials," he said. "However, the beat is small enough that it may not trigger aggressive repositioning unless paired with hawkish Fed commentary; downside risks remain limited unless subsequent data softens broader sentiment."
"XAU/USD may test near-term support zones if Treasury yields edge higher on the data, capping bullish momentum despite ongoing geopolitical and inflation-hedge demand," Salhab added. "A sustained break below recent lows would require broader risk-off flows, while any quick fade of the GDP reaction could see gold stabilize or rebound modestly if markets focus on the still-solid but not explosive growth picture."
