Gold prices came under renewed pressure during Thursday’s trading session (October 29) after US economic data revealed stronger-than-expected growth and persistent inflationary pressures. XAU/USD hovered around US$4,025 per troy ounce—down approximately 1% for the day—as the latest figures reinforced expectations that the Federal Reserve retains the scope to maintain a restrictive monetary policy.
The US economy grew by 3.4% on an annualized basis in the third quarter, a sharp acceleration from 2.2% in the previous quarter and surpassing market forecasts of 3.2%. This growth was driven by private investment, consumer spending, and government expenditure, signaling that the US economy remains resilient in the face of high interest rates.
Simultaneously, Personal Consumption Expenditures (PCE) inflation saw an uptick. Headline PCE rose 0.5% month-on-month in September and 3.6% year-on-year, while Core PCE increased by 0.3% month-on-month and 3.1% year-on-year. These figures indicate that inflation remains well above the Federal Reserve’s 2% target.
The combination of stronger-than-anticipated economic growth and persistent inflation has weighed on gold. Such data sustains the possibility that the Federal Reserve could raise interest rates again in December—a scenario that would likely bolster the US dollar and bond yields, thereby increasing pressure on gold, a non-yielding asset.
In the near term, the psychological level of US$4,000 has once again become a focal point for the market. As long as the US dollar remains strong and expectations for Fed tightening persist, the upside potential for gold will likely remain limited. Nevertheless, geopolitical tensions and demand for safe-haven assets could still provide support, provided that prices manage to hold above this level. (CP)