Gold Price Prediction: New Record High After Lower US GDP, $2,800 Next
Gold made a new record high earlier today, reaching $2,798.40 and it is holding the gains above $2,790, which was the previous all-time high.
This indicates strong buying momentum, with Gold buyers not letting go, which suggests that XAU will break above $2,800 soon, as it makes its way toward $3,000. The current global political and economic situation is very favourable to safe havens such as Gold and it doesn’t look like it’s going to change soon, so the Gold price will continue to remain bullish. The US GDP report helped send XAU/USD above the late October high when GOLD peaked above $2,790.
The market seems to have anticipated a weaker GDP print ahead of the consensus forecast, and the downside miss ultimately materialized as expected. I had noted the potential for this outcome before the release, and the data confirmed that expectation. On the inflation front, this report reveals some early signs of cooling price pressures, which could have implications for tomorrow’s PCE report. If inflation data aligns with this trend, it could further reinforce expectations of a more accommodative Federal Reserve stance, increasing the likelihood of rate cuts later in the year.
Gold Chart Daily – Closing the Day Above October’s High
From a market perspective, these developments could provide bullish momentum for gold, as lower inflation and potential rate cut expectations typically favor non-yielding assets. At the same time, the U.S. dollar faces downside risks, as a softer inflation outlook could weaken its appeal relative to other currencies. Investors will be closely watching the PCE report for confirmation of these trends and their broader impact on market sentiment.
U.S. Q4 2024 Advance GDP Report – Key Highlights & Market Implications
GDP Growth & Economic Performance:
- Q4 GDP: +2.3% (missed expectations of +2.6%), signaling a slowdown from prior quarters.
- Q3 GDP (final revision): +3.1% annualized.
- Q2 GDP (final revision): +3.0% annualized.
Consumer Spending & Inflation:
- Consumer Spending: +4.2% (strong increase from +2.8% prior), indicating resilience in household demand.
- Durable Goods: Slowed from +7.6% prior, suggesting softening demand for big-ticket items.
- PCE Price Index: +2.3% vs +1.5% prior, showing inflationary pressures picking up.
- Core PCE (ex-food & energy): +2.5% vs +2.2% prior, reinforcing concerns about underlying inflation.
- PCE Services (ex-energy & housing): +3.3% vs +2.7% prior, reflecting persistent service-sector inflation.
Business Investment & Trade Contributions:
- Nonresidential Fixed Investment (Business Investment): -2.2% vs +4.0% prior, a concerning decline signaling weakness in capital spending.
- Government Spending Contribution: +0.42% vs +0.86% prior, showing reduced fiscal stimulus impact.
- Net International Trade Contribution: +0.04% vs -0.43% prior, a slight positive shift.
- Inventory Contribution: -0.93% vs -0.22% prior, suggesting a drag on GDP from destocking.
The slower-than-expected GDP growth in Q4 reflects a moderating economy as business investment weakened and inventory drawdowns subtracted from overall output. However, consumer spending remained strong, keeping growth from slowing further. On the inflation front, the Core PCE and PCE price indices rose, reinforcing the notion that inflation pressures remain persistent, particularly in the services sector. This could delay any potential Federal Reserve rate cuts, as the Fed closely monitors PCE inflation for policy decisions.
Gold Live Chart
