U.S. Q3 GDP Outperforms Expectations

It has been a big morning for U.S. economic data, featuring the annualized GDP report for the third quarter (Q3) of 2019. The number came in well above expectations, suggesting that recent FED rate cuts have stimulated economic activity. However, the action on Wall Street has been modest in anticipation of the Thanksgiving holiday.

U.S. GDP (Q3) Shines, Outperforms Projections

Today has been an active pre-holiday session on the U.S. economic calendar. Below is a look at a few of the highlights: 

Event                                                                         Actual    Projected    Previous

GDP Annualized (Q3)                                               2.1%            1.9%              1.9%

GDP Price Index (Q3)                                                1.7%           1.7%              1.6%

Non-Defense Capital Goods Orders (Oct.)            1.2%          -0.3%            -0.5%

Although consumption and Q3 GDP are on the uptick, the GDP Price Index is garnering some added attention. A key barometer of inflationary pressure, the Price Index for Q3 is on the rise. This will come as a relief to Jerome Powell and the rest of the FED. Lagging inflation has been a concern through most of this year ― those days may be coming to an end.

As one would think, the USD is seeing significant bids as a result of today’s U.S. economic data. Gains vs the euro, Swiss franc, Japanese yen, and Canadian dollar have headlined the session.

Gold Quiet Ahead Of The Holiday Break

For almost a month, December GOLD futures have been in a holding pattern just above $1450.00. This is a key technical area, in the vicinity of a macro Fibonacci support level. Ultimately, the intermediate-term bullish trend is intact and a buy-side bias remains warranted toward gold.

Here are several levels from the weekly chart worth noting for December gold:

• Resistance(1): Bollinger MP, 1461.5
• Resistance(2): Weekly SMA, 1490.3
• Support(1): 38% Retracement, 1456.7

Overview: With the end of 2019 rapidly approaching, the macro 38% Fibonacci retracement level at 1457.6 is going to be a key technical area. It has already been tested several times; if this zone fails as long-term support, gold prices will likely head much lower in the near-term. In the event we see more positive news items like today’s Q3 U.S. GDP, then a correction in bullion may come sooner rather than later.