Gold prices edged slightly higher on Thursday, after weaker-than-expected US GDP figures strengthened the call for interest rate cuts.
Prices briefly rose as high as $2,345 an ounce, although prices eased back to around $2,330 an ounce later in the afternoon. That compared with $2,318 an ounce in late deals on Wednesday.
Looking at the week overall, prices have stabilised after Monday’s very sharp drop from as high as $2,387 an ounce, moving in a relatively narrow range.
The US economy expanded by only 1.6% in Q1, compared with 3.4% in the previous quarter, according to figures released Thursday.
The figure was much lower than market expectations of 2.5% growth, and was seen as strengthening the case for interest rate cuts to stimulate the economy. Any start of a monetary loosening cycle is considered a bullish factor for non-interest-bearing assets like gold.
However, the GDP numbers were somewhat balanced by US initial jobless claims figures out on Thursday which came in at 207,000 in the week to April 20, below expectations of 214,000. The lower jobless figures pointed to a slightly stronger than expected economy, mitigating the effect of the weaker GDP figures.
In other news, the World Bank issued a report on Thursday saying it expects gold prices to plateau at their recent highs, resulting in an 8% overall increase in 2024 compared with the 2023 average:
Gold prices have also been supported by central bank buying, while safe haven demand looks set to strengthen in 2024, it said. Looking further out, the bank expects gold prices to dip slightly in 2025.
Looking ahead, the markets will be looking out for US personal income and spending figures on Friday for the latest pulse check on the health of the US economy.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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