Gold Prices Under Pressure Following Strong US GDP Data
Global gold prices recorded a decline in today's US trading session after the release of the latest economic data showing stronger-than-expected US economic growth. Third-quarter US GDP data showed solid expansion, triggering a strong response in financial markets and putting pressure on the precious metal as a safe-haven asset.
A strengthening US economy tends to reduce expectations of further monetary easing by the Fed, as high growth often reduces the likelihood of an imminent interest rate cut. This strong data also supported a strengthening US dollar and rising Treasury bond yields, two factors that typically pressure gold prices by making non-interest-bearing bullion less attractive compared to interest-bearing instruments.
Furthermore, some market participants took profits after gold's recent sharp rally, leading to selling pressure as the dollar strengthened. This situation caused gold to retreat slightly from its recent highs.
Analysts note that the relationship between US GDP and gold prices is often negative under these conditions: strong economic growth tends to support risk assets and strengthen the dollar, while precious metals like gold come under pressure as their traditional appeal as a hedge against uncertainty diminishes.
Nevertheless, some investors continue to view gold as a long-term safe haven amid geopolitical and inflationary uncertainty. However, in the short-term, gold's bullish momentum eased slightly after the release of surprisingly strong US GDP data.
Source: Newsmaker.id
