As of 4:35 PM EST, the February contract of gold futures has fallen for the first time in six trading days. Currently, February gold is fixed at $1929.30, a decline of $13.30 or 0.68%. Gold traded to a high of $1949.80 overseas last night, which was before the release of the GDP report. Following the released GDP report gold traded to a low of $1918.40.
According to the BEA GDP for Q4 2022 increased at an annual rate of 2.9% when adjusted for inflation. This is a decline from the 3rd quarter of 2022 whose GDP indicated growth of 3.2%. The report conveyed that consumer spending, which grew by 2.1% was the foundation of the strong growth in the United States.
Today’s GDP report will strengthen the conviction of hawkish Fed officials to maintain their extremely aggressive monetary policy which includes more rate hikes and keeping those elevated rates for a longer time. This raises the probability that the Federal Reserve will continue to raise rates at the next two FOMC meetings. Market participants are expecting rate hikes of ¼% next week and at the FOMC meeting on March 22.
The caveat to the statement above is tomorrow’s PCE inflation index report. Currently forecast our predicting that tomorrow’s report for the core PCE will show a decline from 4.7% in November to 4.4% in December.