Solid US GDP data drag gold below $1930s as traders await PCE

Gold price drops more than 0.60% due to profit-taking as well as the positive US economic data. US Gross Domestic Product for Q4 has beat markets’ estimates, while jobless claims retreated.

Durable Good Orders jumped while new orders shrank. Gold price retreats after hitting a nine-month high of $1949.16 and dips beneath the $1940 mark, following the release of the Gross Domestic Product preliminary reading in the United States, amongst other data. Therefore, the XAU/USD was trading at 1933.40 for some time earlier on the day, below the opening price by 0.49%.The precious metal is trading at $14927.61 per ounce at the time of writing versus the previous closing price of $1945.78.

US equity futures rose on the release of Q4’s GDP, while Gold extended its losses. The US economy grew at a solid 2.9% QoQ, above estimates of 2.6%, while for Q3, it rose 3.2%, in data revealed by the US Commerce Department. Meanwhile, for the entire year of 2022, the US economy expanded by 2.1%, less than the 5.9% registered in 2021.

The report highlighted that consumer spending was the main driver of economic growth at the start of Q4. Spending remains underpinned by a robust labor market and excess savings.

At the same time, the US Department of Labour reported that Initial Jobless Claims for the week ending on January 21 dropped 6K to a seasonally adjusted 186K, below the estimates of 205 K. In other data, Durable Good Orders rebounded from a -2.1% contraction in November to 5.6% in December, as data for the US Commerce Department showed.

However, core New Orders contracted by -0.1% MoM, aligned with the consensus, as the US economy feels the pain of 425 basis points (bps) of tightening by the US Federal Reserve (Fed).

Gold traders are also awaiting Fed’s inflation gauge on Friday. The US economic docket will announce the US Federal Reserve preferred gauge for inflation, the Core Personal Consumption Expenditures with the monthly reading estimated at 0.3%, while annually based is foreseen at 4.4%. Headline PCE data is expected at 0.1% Mom and 5.5% YoY.