Gold closes at $3,993.86 after falling below $4,000 as markets await rate signals
Key Facts
Gold fell below $4,000 during Friday’s Asian session, extending its decline for a second day, according to a summary published by FXStreet on October 30. The XAU/USD instrument closed at $3,993.86 that day, after closing at $3,991.65 on October 29, according to EL7 data. It closed at $4,067.29 on October 28, putting the latest move in the context of the metal’s retreat from its level two days earlier. The agency said the metal was heading for its second consecutive monthly decline.
Pressure on gold coincided with U.S. data showing faster economic growth in the third quarter. Real gross domestic product grew at an annual rate of 3.4%, compared with 2.2% in the second quarter, according to the U.S. Bureau of Economic Analysis. The bureau attributed the increase to higher investment, consumer spending and government spending, partly offset by a decline in exports. Imports rose at the same time. The figures provide economic context for markets’ reading of the rate outlook, while the Federal Reserve said economic activity was expanding at a solid pace and domestic spending remained resilient.
Price data showed core inflationary pressures persisted. The personal consumption expenditures price index, excluding food and energy, rose 3.1% year over year in September and 0.3% month over month; the monthly increase in August was 0.3%, according to the Bureau of Economic Analysis. The annual rate thus rose from 3.0% in August, according to Dallas Fed data. Personal consumption expenditures in current dollars increased 0.5% in September, after rising 0.9% in August. Monthly personal income growth slowed to 0.2% from 0.3%, while the personal saving rate was 3.8%.
The statement said that “economic activity has been expanding at a solid pace” and that “inflation remains elevated,” citing the committee’s 2% target. Reuters quoted an analyst as saying U.S. economic data during the week had kept the possibility of a rate increase in December alive. According to the agency, traders were pricing in a probability of about 75% of an increase at that meeting. This does not mean the growth and inflation data settled the committee’s next decision; the statement records the October decision and members’ position at that meeting.
Upcoming data include the Institute for Supply Management’s manufacturing index for November, scheduled for release on November 2. The U.S. jobs report for October is also due on November 6, according to the Bureau of Labor Statistics’ calendar. On November 25, the Bureau of Economic Analysis is scheduled to publish its estimate of third-quarter GDP and its report on personal income and outlays for October. These releases put activity, price and income data on markets’ calendar following the Fed meeting. The next rate decision remains in focus as markets await data due before the December meeting.