Gold Slides as US Final GDP Beats Estimate
Gold has posted sharp losses in the Wednesday session, continuing the downward movement which marked Tuesday trading. In North American trade, the spot price for an ounce of gold is $1328.95, down 1.20% on the day. In economic news, Final GDP impressed with a gain of 2.9%, beating the estimate of 2.7%. There was more good news as Pending Home Sales jumped 3.1%, rebounding after the previous release of -4.7%. On Thursday, the US publishes unemployment claims and UoM Consumer Sentiment.
The US economy continues to fire on all cylinders, with Final GDP for the fourth quarter expanding 2.9%. This was higher than the initial estimate of 2.5% back in February. The strong reading has improved risk appetite and sent gold reeling, as the base metal has fallen 1.6% this week.
The tariff dispute between the US and China has dented investor confidence and triggered strong volatility in gold prices. As a safe-haven commodity, gold jumped 1.8% last week, buoyed by President Trump’s dramatic announcement that he was imposing stiff tariffs on up to $60 billion in Chinese imports. China vowed to retaliate and slap imports on a range of US products. This move came on the heels of a blanket US tariff on steel imports. Although Trump backtracked and exempted Canada, Mexico and other countries from the steel tariffs, the threat of a global trading war has unnerved investors. This week, however, China was singing a more conciliatory tune, saying it would apply to the World Trade Organization to overturn the tariffs. The US has imposed the tariffs under a national security provision, but China has argued that the move is a trade barrier with the intent of protecting domestic producers. Although the dispute has not been resolved, the Chinese move has eased tensions and restored investor risk appetite, in the hope that both the US and China will climb down from their trees and reach some agreement instead of imposing tariffs on each other. This sentiment has boosted the stock markets while sending gold prices lower.
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