Gold News

Gold and Silver Firm vs. Rising Dollar as US GDP Beats Forecasts, PCE Inflation Slows

The PRICE of GOLD held firm against a rising US Dollar on Thursday and silver touched $23 per Troy ounce for the first time in a week despite new data saying the world's No.1 economy grew faster than analysts forecast at the end of 2023.
Betting that the Federal Reserve will make its first cut to Dollar interest rates at the March meeting rallied from yesterday's 6-week low, hit after strong US PMI data, but the European Central Bank held its key interest rates unchanged at the highest in the Eurozone's 2-decade history.
Stock markets still rose across the board, with New York's S&P500 index setting its 4th new all-time high in a row.
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Data from gold's No.1 consumer nation China today signalled its first full-year rise in household gold buying on a rising price since 2017.
Shanghai gold prices slipped overnight to 1-month lows at ¥476 per gram, down 1.5% from last week's new all-time high, as China's stock market extended its rebound from 5-year lows following yesterday's monetary easing from the People's Bank.
But after the USA said its GDP grew 3.3% on an annualized basis across the last 3 months of 2023 – well ahead of the consensus 2.0% forecast – gold priced in the Dollar rallied to fix around $2024 per Troy at Thursday afternoon's London benchmarking.
Last week saw claims for US jobless benefits jump sharply, but lay-offs remain close to record lows.
Core PCE inflation – the Federal Reserve's preferred measure of the cost of living – slowed to 3.2% per year at the end of 2023, today's US GDP release said, down to the weakest since the end of 2021 and now more than 2 percentage points below the Fed's key interest rate for the first time since the end of 2007, eve of the global financial crisis.
Chart of US core PCE inflation (quarterly data) vs. effective Fed Funds interest rate. Source: St.Louis Fed
"Rate cut expectations have somewhat slowed as we came into the year with elevated or high expectations," CNBC quotes one spreadbetting bookmakers' analyst, warning that this leaves financial markets "exposed to disappointments".
But for now, "gold is being left a little bit on its own, because the market needs more data to judge whether [it is] at risk of a deeper correction or whether this level around $2000 is strong enough in the short term."
The gold price was meantime unchanged in Euro terms at €1857 but ticked back towards yesterday's 6-week low for UK investors at £1586.
With the death tolls rising in the Ukraine-Russia and Hamas-Israel wars meanwhile, the head of the UK army has called for the government to prepare for conscription while warning of a potential war between Nato and Russia.
US politicians yesterday voted 19-to-1 in favor of recommending that seized Russian assets are used to finance Ukraine's military defenses.
Danish shipping giant Maersk yesterday re-suspended all its traffic through the Red Sea after a US Navy escort failed to deter Houthi attacks against one of its vessels.
"Several Chinese shipping lines have been redeploying their vessels to serve the Red Sea and the Suez Canal," reports the Financial Times, "[advertising] their Beijing connections to avert Houthi attacks that have driven away rivals."
Outpacing the gold and silver price Thursday, crude oil rose to 2-month highs – breaking through $81 per barrel of Brent – after new data overnight showed much heavier than expected US energy demand.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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