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(Kitco News) – Gold prices remain under pressure and are near session lows even as the US economy grew less than expected in the first quarter, according to the latest data from the US Department of Commerce.
The latest economic report says its first reading of gross domestic product showed a 4% increase in the fourth quarter, which fell short of expectations. Economists expected economic growth of around 4.2%. The third quarter saw the GDP increase by more than 33%.
The gold market doesn’t see much reaction to the latest economic data. April gold futures last traded at $ 1,841.70 an ounce, down 0.39% on the day.
While the data has been weaker than expected, this does not come as a major surprise to many economists as the U.S. economy continues to grapple with the devastating effects of the COVID-19 pandemic.
The more modest annualized gain of 4.0% of fourth-quarter GDP was mainly due to a temporary weakness in consumption, which was dragged down by a combination of the withdrawal of budget support and the resurgence of coronavirus infections “said Paul Ashworth, head of the United States. economist at Capital Economics.
On Wednesday, the Federal Reserve noted the slowdown in economic growth in its monetary policy statement, issued after leaving interest rates unchanged in the zero range.
“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors hardest hit by the pandemic,” the statement said.
Katherine Judge, senior economist at CIBC, noted that 4% of U.S. GDP still leaves economic activity 2.5% below pre-pandemic levels.
“We continue to expect a deterioration in business at the start of the first quarter due to declining mobility requirements to contain the spread of the virus,” she said.
Looking at some of the report’s evidence, personal consumption was slightly weaker than expected in the fourth quarter, up 2.5%. Economists expected an increase of about 3.1%.
The report also showed that trade was a drag on growth. In the fourth quarter, exports increased 22.0%; meanwhile, imports increased by 29.5%.
Although the US economy ended the fourth quarter a little slower than expected, Ashworth said he was still optimistic that growth could pick up later this year.
“With effective vaccines offering the possibility of a return to normal later this year and the Biden administration’s intention on more fiscal stimulus, we believe GDP growth will reach 6.5% this year,” did he declare.
Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. This is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.
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