The broader U.S. equity indices are under pressure today after U.S. GDP (Gross Domestic Product) grew at a slower 1.6% pace in the first quarter. The Street largely anticipated that GDP will grow by 2.4% in Q1. The weak GDP print is pushing Gold (CM:XAUUSD) prices marginally higher today as concerns rise over the U.S. economy’s outlook.
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For gold, the price uptick comes after a nearly 3% correction over the past week as traders cranked down assessments of a wider conflict in the Middle East. The weak GDP numbers could also lead to a re-evaluation of the higher-for-longer stance on interest rates from the Fed.
Today’s GDP print also weakens hopes for a soft landing for the U.S. economy. A soft landing is a scenario where the Fed can achieve price stability, while avoiding recession. Meanwhile, the strong PCE (Personal Consumption Expenditures) price index print of 3.4% could mean further delays in rate cuts (if there are any on the cards at all this year).
Will Gold Prices Decrease?
For now, the safe-haven demand for gold remains weak in the short term as tensions in the Middle East gradually recede. Moreover, the current chart setup suggests that gold prices are on a weak footing after this week’s slump. The TipRanks Technical Analysis tool is also flashing mixed signals for gold, indicating that caution may be warranted before initiating any new positions in the yellow metal.
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