Gold attempts to recover after higher-than-expected US GDP data

After the most recent data revealed that the US economy grew faster than anticipated and that inflation came in lower than expected, gold prices are trading at session highs during the North American session. The yellow metal is trading at $2014.39 per ounce at the time of writing.

The US economy grew by 3.3%, much over the 2.0% forecast made by experts, but less than the final Q3 estimate of 4.9%, according to the US Bureau of Economic Analysis’s announcement on Thursday.

The gold market rallied following the GDP data and is trading near session highs. Spot gold was seen around $2,019.59, up 0.27% earlier on the day.

The BEA’s featured measure of inflation, the price index for gross domestic purchases, came in at 1.5%, below the consensus of 2.3%. The price index for personal consumption expenditures (PCE) was 1.7%.

Excluding food and energy, the core PCE price index was 2.0%, in line with the consensus and the same as the third-quarter print.

Although GDP growth came in better than expect in the fourth quarter, underlying inflation continued to slow, with annualized core PCE inflation running at the 2% target in the fourth quarter, the upshot is that an early spring rate cut by the Fed is still the most likely outcome.

The fact that inventories turned out to be a minor positive for overall GDP growth last quarter, despite the markets’ expectation of a reversal following the third quarter’s significant positive contribution, contributed to the beat against the consensus.

Due to a larger-than-expected 6.3% increase in exports, net exports also contributed 0.4% points to GDP growth. The latter resulted from a 9.5% increase in services exports, which seemed a little strange. A sharp slowdown in GDP growth to less than 1% annualized in the first quarter is also expected.