Gold is showing little movement in the Wednesday session. In North American trade, spot gold is trading at $1309.06, down 0.03% on the day. In economic news, Preliminary GDP posted a strong gain of 3.0%, beating the estimate of 2.7%. There was more positive news from the employment front, as ADP Nonfarm Payrolls jumped to 237 thousand, crushing the forecast of 185 thousand. On Thursday, the US releases unemployment claims.
US numbers looked sharp on Wednesday. Preliminary GDP (second estimate) for the second quarter was revised to 3.0%, a marked improvement from the first estimate of 2.6%. Consumer confidence and spending remain strong and helped contribute to the strong GDP report, as the economy posted its strongest gain since the first quarter of 2015. However, solid consumer spending has failed to boost inflation, which continues to hover at low levels. The lack of inflation could hamper the Federal Reserve’s plans to raise interest rates, with the likelihood of a rate hike in December standing at just 35%. On the employment front, ADP Nonfarm Payrolls jumped to 237 thousand, marking a 3-month high. The official Nonfarm Payrolls report will be released on Friday, and if this indicator also beats the forecast, it would be a strong signal that the economic momentum has continued into the third quarter.
Gold is considered a safe-haven asset, and renewed tensions in the Korean peninsula earlier this week propelled the metal above the symbolic $1300 level. On Tuesday, North Korea fired a missile over Japanese territory, drawing sharp condemnations from Japan and the US, with President Trump declaring that "all options remain on the table". However, tensions have since eased somewhat, restoring risk appetite and sending gold prices lower. Still, if North Korea decides to fire another missile towards Japan or the US military base on Guam, it is likely that gold prices will move higher.
