Gold Closes Below $4,000 as U.S. Economy Grows 3.4% in Third Quarter
Key Facts
Gold closed below $4,000 an ounce for two consecutive days, at $3,991.65 on October 29 and $3,991.9 on October 30, according to EL7 data. The move came as the advance estimate showed U.S. gross domestic product grew at an annual rate of 3.4% in the third quarter, after 2.2% in the second quarter, according to the U.S. Bureau of Economic Analysis. On October 29, spot gold fell 0.5% to $4,001.56 an ounce at 21:07 Eastern time, while U.S. futures dropped 0.4% to $4,012.52, according to Investing.com. Closing data show the metal ended the following session below the threshold, after closing at $4,067.29 on October 28. The move coincided with strong U.S. economic data, but the latest monetary policy decision was to hold rates steady, contrary to what appeared in the initial draft.
The Federal Reserve did not raise interest rates at its October 28 meeting, instead holding the target range at 3.75% to 4%. The statement was approved by a vote of 10 to 2, with the two dissenting members favoring a quarter-percentage-point increase in the range. At its previous meeting on September 16, the Fed raised the range by a quarter point to its current level; the September decision was unanimous, with a vote of 12 to zero. The Fed said in its statement that "economic activity has been expanding at a solid pace" and that "inflation remains elevated." It added that the accumulation of more information would help the committee determine the appropriate policy stance. Available data do not establish that the growth figures raised market expectations for an interest-rate increase, so it would be incorrect to describe a hike as a decision the Fed made in October.
The GDP report showed that increases in investment, consumer spending and government spending contributed to third-quarter growth, partly offset by a decline in exports. Consumer spending rose 3.8% in the quarter, while business investment excluding housing increased 12.7%, according to data reported by the Associated Press. Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, also rose at an annual rate of 4.9%, after 4.6% in the second quarter. The figures point to continued strength in domestic demand during the period, alongside faster overall growth than in the previous quarter. By contrast, the decline in exports tempered the increase in output.
The inflation picture varied across third-quarter data and September's monthly and annual readings. The personal consumption expenditures price index, or PCE, rose at an annual rate of 2.1% in the third quarter, compared with a 5.0% increase in the second quarter, while the core index, which excludes food and energy, slowed to 2.5% from 3.3%. But September's annual reading showed the headline index rising 3.6%, compared with 3.4% in August. On a monthly basis, the core index rose 0.3% in September, while the headline index increased 0.5%. The annual reading of 3.6% compares September with September of the previous year; it is not inflation for the period ending on the day the data were published. The Fed has said inflation remains elevated, despite the slowdown in some measures of price growth in the quarterly data.
Against this backdrop for the metal, an Investing.com report said gold lost more than 3% in October, while renewed clashes in the Middle East kept energy prices high and stoked inflation concerns. Investors are tracking two developments at once: strong U.S. economic growth and inflation readings that present a mixed picture between the third quarter and September. The Fed said additional information would help it determine its policy stance, without announcing a new rate increase in its October statement. The second estimate of third-quarter GDP growth is due on November 25, 2026. On the same date, the personal income and outlays report for October is due at 8:30 a.m. Eastern time. The Federal Open Market Committee's next meeting is scheduled for December 8 and 9, 2026.