Gold Held Back After US Data, Core Inflation Remains Main Brake
Gold prices tended to move within a limited range after a series of US economic data tonight provided conflicting signals. On the one hand, slowing growth was clearly evident in the Prelim GDP q/q of only 0.7% (below expectations of 1.4%), which typically lowers yields and provides room for gold. On the other hand, core inflation remained "sticky," with Core PCE m/m remaining at 0.4% (in line with expectations and the same as the previous month), making it difficult for the market to shift to expectations of aggressive interest rate easing.
The bearish factor for gold grew stronger as the Prelim GDP Price Index q/q rose to 3.8%, higher than the 3.6% forecast. This rise in price indicators reinforces the perception that price pressures remain, potentially keeping yields high and this typically limits gold rallies, as gold offers no yield.
In terms of activity, consumption appears to be holding up. Personal Spending m/m rose 0.4% (above the 0.3% forecast), while Personal Income m/m rose 0.4% (slightly below the 0.5% forecast). This data led the market to believe that the economic slowdown was not yet in "free fall," so the dovish impulse that usually boosts gold was not immediately dominant.
Signs from the business investment side also did not significantly boost gold sentiment. Core Durable Goods Orders m/m were only 0.4% (below 0.5% and slowing from 1.0%), while headline Durable Goods Orders were stagnant at 0.0% (well below the 1.1% forecast). This adds to the narrative of cooling demand for capital goods, but remains overshadowed by the message of persistently high inflation.
In conclusion, gold is in a "tug-of-war" phase: weakening growth provides a cushion, but persistently high core inflation and a rising GDP price index act as brakes, so gold's movement is more likely to consolidate until the market receives confirmation of the direction of yields and the dollar.
A Quick Impact Typically Seen in Gold
If Treasury yields fall significantly after this release and the USD weakens, gold has room to strengthen.
If the market focuses more on inflation (Core PCE 0.4% + GDP Price 3.8%), resulting in stable/rising yields, gold tends to be held back.
What to Watch (Gold in particular):
UST 10Y & 2Y Yields: The fastest movers for XAU/USD.
DXY (USD): A strong dollar usually holds gold back.
Oil Prices: High oil prices can mitigate inflation risks and prevent yield declines.
Market reaction to the combination of "weak growth but high inflation" in interest rate pricing. (CP)
Source: Newsmaker.id
