Despite the United States Bureau of Economic Analysis (BEA) reporting a higher-than-expected economic growth rate of 3.3% against the anticipated 2%, gold prices (XAU/USD) have witnessed a rise. The Gross Domestic Product (GDP) demonstrated robust growth of 4.9% in the July-September quarter. The upbeat GDP data challenges the prevailing consensus suggesting potential early interest rate cuts by the Federal Reserve (Fed).
The resilience of the US economy is further underscored by stronger January Purchasing Managers’ Index (PMI) data and a stable labor market. This resilience, coupled with robust consumer spending and strong labor demand, provides a foundation for Fed policymakers to consider rate cuts as “premature” starting from March.
Looking ahead, market participants are closely monitoring the upcoming core Personal Consumption Expenditure price index (PCE) data for December, scheduled for release on Friday. This core inflation indicator holds significance for Fed policymakers in determining the direction of the interest rate policy, contributing to the ongoing dynamics in the gold market.
