Gold prices were slightly lower on Friday morning, marking the fourth consecutive trading day that the yellow metal has given up ground. This dip in the precious metal market in general came right after gold hit a two-month high, so a bout of profit-taking accounts for much of this week’s downward action. Spot prices were down just 0.1%, holding above $1,187 per ounce.
Meanwhile, spot silver surged about 0.8% above unchanged, trading just shy of $17/oz.
Platinum prices lost about 0.4% to fall to $970/oz. After taking an absolute thrashing on Thursday, the palladium market was clawing back to end the week, adding 1.4% to $730/oz.
The big economic announcement that drove markets on Friday morning was the release of fourth-quarter gross domestic product (GDP) data. According to U.S. Commerce Department, the economy expanded at a 1.9% clip (annualized) during Q4. This was below expectations of 2.2% and a far cry from the 3.5% rise in GDP measured in the previous quarter. Wall St opened slightly in negative territory following the news.
Per usual, the Q4 figure will be revised over the next few months as more information about the economy’s performance will be available. Despite the apparent slowdown to end the year, most analysts are expecting an acceleration of GDP growth during 2017. One cause cited for the pullback during Q4 was a stronger dollar in the wake of President Trump’s electoral victory. A stronger greenback hurts American exporters and adds to the trade deficit. 2016 marked the 11th straight year of sub-3% GDP growth.
Also, durable goods orders by U.S. businesses were 0.4% lower in December, falling woefully short of analysts’ predictions of a 2.3% gain. However, this was still a vast improvement over November, when orders slumped 4.6%.
In most of the world’s major economies, a healthier level of inflation seems to be on the menu. Rising bond yields in the U.S., the U.K., and Germany reflect these great inflation expectations. The U.S. government’s preferred measure of inflation, personal consumption expenditures, was 1.7% higher during the third quarter and rose another 1.3% in the fourth quarter. Similar, the most recent gauge of consumer sentiment in January came in a 13-year high.
If indeed inflation continues to progress at a steady pace, it will almost certainly embolden the Federal Reserve to stick to its plan of steadily increasing interest rates. Some believe the Fed will embark on as many as four rate hikes next year, though other experts don’t see this kind of rate normalization happening until 2018. In any event, this uptick in inflation could prove bullish for gold.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.