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Gold just a sigh away of fresh all-time high ahead of US GDP release

  • Gold roars and jumps over 0.80% in the European trading session ahead of US GDP release.
  • A policy spat is unfolding in the US between Fed Chairman Powell and US President Trump. 
  • Gold’s price is inching towards an all-time high, which could take place any moment. 

Gold’s price (XAU/USD) is grinding higher this Thursday towards $2,778 at the time of writing and is really close to a fresh all-time high. Bullion was unable not make that happen on Wednesday, after a rather hawkish Federal Reserve (Fed) decision on interest rates delivered some headwinds. The main element that drew all the attention was Fed Chairman Jerome Powell’s reaction to questions about United States (US) President Donald Trump and his persistent call for substantially lower rates and borrowing costs. 

A clash is coming, that looks to be certain, between the White House and the Federal Reserve. Fed Chairman Powell persistently refused to deliver any comments on questions from journalists around President Trump. The hawkish tilt from the Fed is a message to President Trump that the Fed remains independent and needs to see a clear and unambiguous weakening in the data to prompt further action.

Daily digest market movers: Gold repatriation

  • Markets perceived the Fed rate decision as rather hawkish as the Fed does not seem to be in a hurry to lower US interest rates, Bloomberg reports.
  • A surge in Gold shipments to the US has led to a shortage of bullion in London, as traders amass a $82bn stockpile in New York due to fears of Trump administration tariffs, the Financial Times reports. 
  • The Gold Bar Integrity Database, developed by the London Bullion Market Association, has been launched. The database will trace the precious metal to prevent supply from criminal gangs or conflict zones ending up in bank vaults and stop counterfeit bars stamped with the logos of major refineries from entering the market, Bloomberg reports. 
  • The US Gross Domestic Product (GDP) data for the fourth quarter of 2024 will be released at 13:30 GMT. 

Technical Analysis: All eyes on GDP as catalyst

Although the Fed’s interest rate decision on Wednesday was rather hawkish, that does not mean that Gold is barred from moving higher. In the US GDP report scheduled later this Thursday, the Personal Consumption Expenditures (PCE) component could trigger another leg up in Gold’s price, certainly if the number comes in softer than expected. That would mean a slowdown in the inflation metrics, which could quickly bring Gold up to the all-time high of $2,790.

The first line of support comes in at $2,721, a sort of double top in November and December broken on January 21. Just below that, $2,709 (October 23, 2024, low) is in focus as a second nearby support. In case both abovementioned levels snap, look for a dive back to $2,680 with a full-swing sell-off. 

Conversely, that all-time high of $2,790 is very near now, less than 1% away from current levels. Once above that, a fresh all-time high will present itself. Meanwhile, some analysts and strategists have penciled in calls for $3,000, but $2,800 looks to be a good starting point as the next resistance on the upside. 

XAU/USD: Daily Chart

GDP FAQs

A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.