(Kitco News) – In delayed reaction, Gold prices pushed above $1,900 an ounce as economic data shows just how much damage the COVID-19 pandemic inflicted on activity in the second quarter.

Wednesday, the U U.S. Commerce Department said that the impact the COVID-19 pandemic on second-quarter Gross Domestic Product was slightly less than expected, according to its final estimates.

According to the latest report, annualized second-quarter GPD declined by 31.4%, Economists were expecting to see a decline of 31.7%.

“The upward revision with the third estimate primarily reflected an upward revision to personal consumption expenditures (PCE) that was partly offset by downward revisions to exports and to nonresidential fixed investment,” the report said.

Accoridng to Jim Wyckoff, senior technical anlyast at Kitco.com, the gold market is seeing technical buying as the latest economic data point to continued uncertainty. December gold futures last traded at $1,903 an ounce, relaitvley unchanged on the day.

Some commodity analysts have said that the latest economic data have not been a signifciant driver for gold prices because it is “old news.” Market players are now focused on the recent wave of better-than-expected data that have raised hope for a fast recovery, the analysts have said.

Looking at some of the components of the report, personal consumption was slightly better than expected. It declined by 33.2%, up slightly from the previous estimated decline of 34.1%.

However, trade was slightly worse than expected. The report said that U.S. exports declined 64.4% in the second quarter, down from the previous estimate of 63.2%. Meanwhile, imports were also slight weaker, declining 54.1%, down from the prior estimate of 54.0%.

Government spending in the second quarter was also lower than expected, rising 2.5%, down from the previous estimate of 2.8%.

Positive for the gold price is stronger than expected inflation data. the report said that core Personal Consumption Expenditures, fell 08% in the second quarter, up from the previous estimate of a drop of 1.0%.

The GDP price index declined 1.8%, up from the previous estimated decline of 2.0%.

Analysts have noted that despite the short-term volatility, which has driven gold prices to their worst monthly performance since November 2016, gold’s long-term fundamentals are firmly in place. Rising inflation, coupled with low interest rates will push real yields lower, which makes gold an attractive safe-haven asset, according to analysts.

Author: Neils Christensen

Source: Kitco: Gold price pushes above $1,900 in delayed reaction as Q2 U.S. GDP contracts 31.4%

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