Gold prices fall as US GDP increases

Some concerns about increased risks in the general market this weekend are boosting safe-haven demand for precious metals. December gold contract decreased by 0.1 USD, to 3,768.5 USD/ounce. December silver price increased sharply by 0.668 USD, to 44.865 USD/ounce.

The US GDP report for the second quarter just released showed an increase of 3.8% over the same period last year, higher than the market's forecast of 3.5%.

The PCE index on inflation in the GDP report was also slightly higher than expected. This GDP report is in the view of US "tailings" monetary policy makers and is somewhat at a disadvantage for precious metals.

Global stocks largely weakened last night. US stock indexes are expected to fall when the trading session in New York opens.

According to Jim Wyckoff - senior analyst at Kitco, the risk-off sentiment will increase this weekend due to concerns about the possibility of a US government shutdown and the escalating tensions in the Russia - Ukraine war. The White House Budget Office is asking US federal agencies to prepare plans for mass layoffs in the event the US government could close next week.

Agencies are directed to identify programs with arbitrary funding sources that will expire and draft a plan to permanently cut positions that are not in line with the priorities of the Donald Trump administration.

This move is seen as an escalation beyond traditional closure procedures, where non-essential government employees are often given temporary leave and then called back to work with compensation, Bloomberg reported.

The Senate minority leader Chu Chu Schumer called it a threatening effort, asserting that these unnecessary sacking cases will be rejected by the court or the government will eventually have to re-recruit those workers. This memorandum of understanding on termination of labor contract was first reported by Politico.

In outside markets, the US dollar index rose after an optimistic GDP report, while crude oil prices fell slightly, trading around $64.75/barrel. The yield on the 10-year US Treasury note is currently at 4.14%.

The US economic data expected to be released today include the weekly jobless claims report, adjusted corporate profits, the third estimate of Q2 GDP, the composite Economic Index report, long-term orders, existing home sales and a Harris City Fed manufacturing survey.

Technically, investors who are willing to increase their December gold contracts are still holding a strong advantage in the short term. The next target for buyers is to close the session above the solid resistance level of 3,900 USD/ounce. In contrast, the near target for the bears is to pull prices below the strong support level of $3,650/ounce.

The first resistance level was recorded at 3,800 USD/ounce, followed by the highest level this week at 3,824.6 USD/ounce. First support was identified at a low of $3,749.7/ounce on Wednesday, followed by a low of $3,718.1/ounce this week.