(Kitco News) - Gold prices remain under pressure as the U.S. economy saw a sharper than expected recovery in the third quarter, according to preliminary data.
Thursday, the U.S. Commerce Department said that the advance estimate of the second-quarter gross domestic product showed that the U.S. economy grew 33.1%, recovering from a 31.4% decline reported in the second quarter.
According to consensus estimates, economists were expecting to see GDP grow 32% in the third quarter.
“The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified,” the report said.
Gold prices are trading near session lows in initial reaction to the latest economic data. December gold futures last traded at $1,869.20 an ounce, down 0.5% on the day.
Economist note that third quarter growth is the best on record, following the worst contraction in history seen in the second quarter.
“These are all breathtaking numbers but were largely expected,” said Adam Button, chief currency strategist at Forexlive.com.
Looking at some of the components of the report, personal consumption in the third quarter grew more than expected, increasing 40.7%. Economists were expecting to see an increase of 38.9%.
Meanwhile business investment increased 20.3%, up from a 27.2% decline reported in the second quarter.
Third-quarter trade data was a slight drag on GDP. The report said that exports rose 59.7% between July and September, up from the second-quarter decline of 64.4%. However, imports grew at a faster pace, rising 91.1%, up from a 54.1% decline in the second quarter.
Looking at inflation data, the GPD price index rose 3.6% in the third quarter, beating consensus estimates. Economists were expecting to see an increase of 2.9%.
Core Personal Consumption Expenditures Index, rose 3.5% in the third quarter, missing expectations. Economists were expecting to see a 4.0% rise in core PCE.
Although the latest GPD data was better than expected, Katherine Judge, senior economist at CIBC said that the U.S. still faces a long recovery ahead. She added that economic growth is still down 3.5% for the year and the future growth remains uncertain.
“While an encouraging data print, the fourth quarter is likely to show a material deceleration in growth as Covid cases are now surging at a time when fiscal stimulus is fading, suggesting that the economy will require additional support to remain on track until a vaccine is widely available,” she said.
https://news.google.com/__i/rss/rd/articles/CBMiV2h0dHBzOi8vd3d3LmtpdGNvLmNvbS9uZXdzLzIwMjAtMTAtMjkvR29sZC1wcmljZS1kb3duLWFzLVUtUy1HRFAtZXhwYW5kZWQtMzMtaW4tUTMuaHRtbNIBAA?oc=5
2020-10-29 12:35:00Z
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