Gold Trading at Record Highs as US Consumer Spending Boosts GDP, Inflation Slips
Thursday, 8/29/2024 16:00
GOLD PRICES recovered a small drop on Thursday to trade unchanged for the week so far, holding at last Friday's record-high weekly close above $2500 per Troy ounce despite world No.1 economy the USA reporting slower inflation and stronger GDP growth, driven by higher consumer spending.
Federal Reserve chairman
Jerome Powell confirmed at last week's Jackson Hole event that the Fed will start cutting interest rates from today's 2-decade highs at the US central bank's September meeting.
With auto and credit-card delinquencies rising and "elevated" in Q2 on data from the New York Fed, "People who rely on credit cards and other forms of borrowing to finance all sorts of things in their lives...disproportionately folks who are poor...they're
really hurting because interest rates are really high," says progressive think tank Groundwork Collaborative.
Both mortgage debt and non-housing debt rose to record nominal sums as the US economy accelerated in the April-to-June quarter.
But as a proportion of GDP, household debt has fallen towards 70% from the 100% record set on the eve of the subprime mortgage and then global financial crisis of 2007-2012,
according to separate data published by the St.Louis Fed.
Debt service
payments as a percentage of disposable personal income have meantime remained steady at around 10% for more than a decade.
"The proportion of consumers
predicting a recession [is] stable and well below the 2023 peak,"
said the Conference Board think tank this Tuesday, reporting that US consumer confidence hit a 6-month high in August.
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Consumer spending plus a rise in business' inventories drove today's upwards revision to Q2 GDP growth, said the Bureau of Economic Analysis today, "partly offset by a downturn" in residential real-estate construction.
While inflation on the GDP prices index was revised higher to 2.4%, knocking 0.1 percentage points off
the upwards revision to real economic growth, the more closely followed PCE measure was revised down 0.1 points on both the headline index – now showing inflation of 2.5% - and on the 'core' index, now reading 2.8% when food and energy are excluded.
With the European Central Bank already starting to cut Eurozone interest rates in June, new inflation data today also came in below consensus forecasts for Germany, now the world's 3rd largest economy behind the US and China, slowing just below the ECB's 2.0% target for the first time since March 2021.
Frankfurt's Dax index rose to a new all-time high, outpacing the rest of Europe's major bourses.
New York's stock market then opened the day higher, reversing yesterday's late drop after forecast-beating quarterly earnings from
AI chip giant Nvidia (Nasdaq: NVDA) failed to prevent a 2.2% drop in the $3 trillion stock – the world's 2nd largest by market capitalization.
The Dollar rose to a 1-week high on its trade-weighted index against the rest of the world's major currencies, extending its rally from Tuesday's 13-month low.
Gold priced in the Dollar reversed a $15 drop on the GDP data, trading back close to $2520 per Troy ounce.
Euro gold prices meantime rose within €10 of the spot bullion market's April and August all-time highs, trading at €2276.
UK gold prices in Pounds per ounce also rose to show a 0.3% gain for the week so far, trading at £1913.
Silver bullion meantime continued to hold dead-flat for the week so far on Thursday, trading at $29.43 per Troy ounce.
Last Friday that level marked its highest weekend finish in 6 in London, global storage and trading hub for physical precious metals.
Separate US data today put both new and ongoing claims for US jobless benefits in line with analysts' consensus forecasts for last week, while July's trade deficit in goods came in above $100 billion.
Outside the inflation-spike deficits of January-to-June 2022, that would mark a monthly record for America's shopping bill with the rest of the world.
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