Gold Holding Near 3.5-Month Highs ! Gold Holding Near 3.5-Month Highs As U.S. GDP Expands 1.9% In Q4
Neils Christensen
Tuesday February 28, 2017 08:34
Kitco News
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(Kitco News) - Gold prices continue to hold near their 3.5-month highs following data highlighting weaker-than expected U.S. economic growth.
Tuesday, the Department of Commerce said that fourth-quarter preliminary U.S. gross domestic product expanded by 1.9% in the third quarter, unchanged from growth reported in the advanced reading. According to consensus estimates, Economists were expecting to see growth of 2.1%. Fourth-quarter growth is down from 3.5% gains reported in the third quarter.
Gold was slightly weaker ahead of the report and was relatively unchanged following the report. April gold futures last traded at $1,255 an ounce, down 0.30% on the day.
“With the second estimate for the fourth quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger and increases in state and local government spending and in nonresidential fixed investment were smaller than previously estimated,” the report said.
Consumer spending continues to be the biggest driver of the U.S. economy, increasing to 3% in the second reading, up from 2.5% reported in the first estimate.
The second reading for fourth quarter GDP also showed a mixed strength in trade data. Exports were down 4.0% in the final three months of the year, compared to a drop of 4.3% reported in the first estimate. At the same time, imports were slightly stronger than previous estimated; imports grew by 8.5% in the fourth quarter, compared to 8.3% reported in the first estimate.
Some economists are dismissing the lackluster performance in the fourth quarter as backward looking and are focused on an expected pickup in activity in the first quarter of 2017.
“The bigger story is that GDP growth accelerated markedly between the first and second halves of 2016. Furthermore, the marked improvement in the survey evidence recently suggests that growth will continue at a decent pace in the first half of this year too. First-quarter GDP growth is currently tracking at about 2.5%,” said Paul Ashworth, chief U.S. economist at Capital Economics.
By Neils Christensen