Gold prices saw modest gains during Thursday’s North American session, climbing more than 0.5% following the release of key economic data from the United States (US). First-quarter 2024 GDP figures fell short of expectations, sparking speculation that the US Federal Reserve (Fed) might consider cutting borrowing costs. However, inflation for the same period surged, potentially delaying any interest rate cuts by the Fed.
XAU/USD is trading at $2,330 after rebounding from daily lows of $2,305, driven by higher US Treasury yields amid a resurgence in inflation. Analysts had anticipated a slowdown in the US economy for 2024, but the first-quarter figures missed estimates by a significant margin. This scenario keeps the narrative of a “soft landing” intact, yet underlying inflation for Q1 2024 surged by 3.7% quarter-over-quarter, surpassing expectations and far exceeding the 2% registered in Q4 2023.
The recent data aligns with the shift in stance observed among Fed officials last week. Federal Reserve Chairman Jerome Powell indicated concern about the lack of progress in addressing inflation this year.
Similar sentiments were echoed by several policymakers, notably Chicago Fed President Austan Goolsbee, who described the Fed’s current restrictive monetary policy as appropriate, signaling a cautious approach towards rate adjustments in response to inflationary pressures.
