Gold slipped on Thursday after U.S. GDP and PCE inflation data kept expectations for Federal Reserve rate hikes elevated. Spot gold dropped 1.4% to $4,009.85/oz, while oil prices reversed course in a choppy session.
Gold prices slipped on Thursday as expectations for Federal Reserve interest rate hikes remained elevated after U.S. economic data. Oil's choppy session also kept precious metal market participants on edge.
At 15:15 ET, spot gold dropped 1.4% to $4,009.85/oz. Gold futures shed 0.3% to $4,021.25/oz over the same period.
Fed holds rates amid two dissents
The Federal Open Market Committee on Wednesday kept the key policy rate steady in a 10-2 vote. Governor Lisa Cook and Cleveland Fed President Beth Hammack preferred a quarter-point hike instead.
Fed Chair Kevin Warsh declined to provide any forward guidance on interest rates. Markets now widely expect the Fed to raise rates at its final meeting of the year in December.
GDP and PCE data support the case for hikes
Thursday saw the start of a deluge of economic data before the December meeting. U.S. real GDP ticked up 3.4% in Q3, according to the first estimate by the Bureau of Economic Analysis, above the 2.2% growth in Q2 and economists' expectations of 3.2%.
Meanwhile, the headline PCE price index rose 0.5% M/M in September, while core PCE rose 0.3%. On a Y/Y basis, headline PCE climbed 3.6% and core PCE inched up 3.1%. All four readings came in line with estimates, and the Y/Y figures were significantly above the Fed's long-term 2% target.
BlackRock's Rick Rieder said the Fed's patience was the "right approach", arguing that another 25-basis-point rate increase is unlikely to meaningfully affect persistent pressures across energy, insurance, healthcare and education.
Oil turns higher
Crude also weighed on gold. Brent crude futures added 0.2% to $111.01 a barrel after oil erased earlier losses.
Traders weighed signs of diplomatic efforts between the U.S. and Iran against supply disruption fears from fighting between Iran-backed Houthis and the Saudi Arabia-backed government in Yemen. President Donald Trump told Axios that negotiations were taking place through mediators, but he did not know whether they would produce results.
Source: Investing.com
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