U.S. Economy Grows 3.4%, Sending Gold to Close at $4,010.605
Key Facts
U.S. real gross domestic product grew at an annual rate of 3.4% in the third quarter of 2026, according to the Bureau of Economic Analysis’ advance estimate, while spot gold closed at $4,010.605 on October 29, according to EL7 data. Growth came in above EL7’s 3.2% forecast and accelerated from 2.2% in the second quarter. The Federal Reserve kept its target rate range at 3.75% to 4.00% the previous day. After the decision, traders’ bets on a December rate hike fell to about 78%, from 84% beforehand, according to Reuters. These developments put economic growth, inflation and the Fed’s decision at the forefront of factors gold traders were watching.
The acceleration in GDP reflected faster investment growth and a shift in government spending to an increase, according to the Bureau of Economic Analysis, while lower exports partly offset these factors. Imports rose at a faster pace in the third quarter than in the second, the bureau said. Real final sales to private domestic purchasers also increased at an annual rate of 4.9%, after 4.6% in the second quarter. The reading points to continued strength in private domestic demand during the quarter, alongside overall growth that exceeded EL7’s forecast. The GDP data were an advance estimate, with the bureau set to release its second estimate on November 25.
The increase in investment included gains in private inventories and equipment, according to the Bureau of Economic Analysis breakdown. Consumer spending also rose across goods and services. The Associated Press estimated business investment excluding housing grew 12.7% in the third quarter, attributing the increase to spending related to the AI boom. That figure covers business investment excluding housing and does not represent total investment. The increase was among the investment components the bureau said contributed to faster GDP growth during the quarter.
September data showed the personal consumption expenditures price index rose 0.5% during the month and 3.6% from a year earlier, according to the Bureau of Economic Analysis. The index excluding food and energy increased 0.3% month on month and 3.1% year on year. By contrast, the quarterly inflation measure slowed: the PCE price index rose at an annual rate of 2.1% in the third quarter, compared with 5.0% in the second quarter. The core index rose 2.5% in the third quarter, after 3.3% in the previous quarter. The figures distinguish September’s increase in annual inflation from the lower quarterly rates compared with the second quarter.
The Federal Open Market Committee kept its target rate range at 3.75% to 4.00% at its October 28 meeting, approving its statement by a vote of 10 to 2, according to the Federal Reserve. The two dissenting members favored raising the range by a quarter of a percentage point. The Fed said in its statement that “inflation remains elevated.” It added that the accumulation of more information would help the committee determine the appropriate policy stance. After the decision, traders’ priced-in probability of a December rate hike fell to about 78% from 84% before the announcement, according to Reuters.
In October 29 trading, spot gold fell 0.7% to $4,037.98 an ounce at 04:10 GMT, with the probability of a December rate hike priced at about 78%, Reuters reported. EL7 data showed a close at $4,010.605, compared with $4,067.29 on October 28. Ahead of the Fed meeting, gold fell to a three-month low on October 23, touching $3,975.23 an ounce, Reuters reported. The metal was down 4% for the week ended that day. These levels chart gold’s movement before and after the meeting, alongside the change in rate expectations reported by Reuters.
Household spending in September showed personal consumption expenditures in current dollars rose 0.5%, while real spending was little changed, increasing by less than 0.1% during the month, according to the Bureau of Economic Analysis. The personal saving rate was 3.8%, with savings of $911.1 billion. The bureau is scheduled to release its second estimate of third-quarter GDP on November 25, 2026, at 8:30 a.m. Eastern time. The Federal Reserve’s next meeting is scheduled for December 8 and 9, 2026. These dates follow October’s decision and the growth and inflation data that formed the backdrop to market pricing of a possible December rate hike.