US GDP KEY POINTS:
- US GDP Q3 (2nd Est) Actual 5.2% Vs 2.1% Previous.
- GDP Price Index QoQ (2nd Est) Actual 3.5% Vs 1.7% Previous.
- Markets Continue to Price in More Aggressive Rate Cuts from the Fed in 2024, Weighing on the US Dollar.
The US economy grew at an annualized rate of 5.2% in Q3 2023, above the forecasted figure of 5% and revised from the initial estimate of 4.9%. The latest GDP estimate is based on more complete data than the previous "advance" estimate.
The update showed upward revisions to nonresidential fixed investment and state and local government spending, but there was a downward revision to consumer spending. Residential investment increased faster than expected (6.2% vs 3.9% in the initial estimate), private inventories contributed more to growth, and government spending increased at a faster rate (5.5% vs 4.6%). However, consumer spending only rose by 3.6%, slightly lower than the initial estimate but still the largest gain since Q4 2021.
Disposable personal incomeincreased $144.0 billion, or 2.9 percent, in the third quarter, an upward revision of $48.2 billion from the previous estimate.Real disposable personal incomeincreased 0.1 percent, an upward revision of 1.1 percentage points.
US ECONOMY
The US Dollar lost ground despite the data today. There is optimism for earlier rate cuts in 2024, with Bill Ackman suggesting the Fed may act sooner. Fed Policymakers have taken a dovish tone, although Bowman remains slightly hawkish.
The US economy is expected to slow down in Q4 due to higher borrowing costs affecting hiring and spending. The Service sector remains a concern for the Federal Reserve due to high demand and elevated prices. It will be interesting to see how the US economy fares in late 2023 and early 2024 in its fight against inflation.
MARKET REACTION
XAUUSD
Following the data release the dollar index remained relatively unchanged which shouldn’t come as a surprise. Since then, the DXY has actually retreated a bit but still remain marginally up for the day as it looks to bounce back from 4-month lows.
Gold prices surprised me yesterday if I am being honest but the explosion above the $2000 mark came about largely as markets priced in more rate cuts from the Fed in 2024. At current price levels there is not a lot to analyze from a technical standpoint as price has barely traded at these levels in the past.
However, should we fail to break above the $2050 mark and given the speed of the rally yesterday we could get some form of retracement. Gold bulls will hope for a weekly candle close above the $2000 mark which would be a meaningful step toward further upside.
- US GDP Q3 (2nd Est) Actual 5.2% Vs 2.1% Previous.
- GDP Price Index QoQ (2nd Est) Actual 3.5% Vs 1.7% Previous.
- Markets Continue to Price in More Aggressive Rate Cuts from the Fed in 2024, Weighing on the US Dollar.
The US economy grew at an annualized rate of 5.2% in Q3 2023, above the forecasted figure of 5% and revised from the initial estimate of 4.9%. The latest GDP estimate is based on more complete data than the previous "advance" estimate.
The update showed upward revisions to nonresidential fixed investment and state and local government spending, but there was a downward revision to consumer spending. Residential investment increased faster than expected (6.2% vs 3.9% in the initial estimate), private inventories contributed more to growth, and government spending increased at a faster rate (5.5% vs 4.6%). However, consumer spending only rose by 3.6%, slightly lower than the initial estimate but still the largest gain since Q4 2021.
Disposable personal incomeincreased $144.0 billion, or 2.9 percent, in the third quarter, an upward revision of $48.2 billion from the previous estimate.Real disposable personal incomeincreased 0.1 percent, an upward revision of 1.1 percentage points.
US ECONOMY
The US Dollar lost ground despite the data today. There is optimism for earlier rate cuts in 2024, with Bill Ackman suggesting the Fed may act sooner. Fed Policymakers have taken a dovish tone, although Bowman remains slightly hawkish.
The US economy is expected to slow down in Q4 due to higher borrowing costs affecting hiring and spending. The Service sector remains a concern for the Federal Reserve due to high demand and elevated prices. It will be interesting to see how the US economy fares in late 2023 and early 2024 in its fight against inflation.
MARKET REACTION
XAUUSD
Following the data release the dollar index remained relatively unchanged which shouldn’t come as a surprise. Since then, the DXY has actually retreated a bit but still remain marginally up for the day as it looks to bounce back from 4-month lows.
Gold prices surprised me yesterday if I am being honest but the explosion above the $2000 mark came about largely as markets priced in more rate cuts from the Fed in 2024. At current price levels there is not a lot to analyze from a technical standpoint as price has barely traded at these levels in the past.
However, should we fail to break above the $2050 mark and given the speed of the rally yesterday we could get some form of retracement. Gold bulls will hope for a weekly candle close above the $2000 mark which would be a meaningful step toward further upside.
