Spot gold rose 0.5% to $2,022.84 per ounce by 10:14 a.m. ET (1514 GMT). U.S. gold futures rose 0.4% to $2,023.20.
Benchmark 10-year Treasury yields slipped after the GDP data. The U.S. economy grew faster than expected in the fourth quarter amid strong consumer spending, with growth for the full year coming in at 2.5%.
“The economy is running a lot hotter than expected, but at the same time, we are having a situation where inflation is coming down, therefore we shouldn’t prepare for a big spike in interest rates,” Bart Melek, head of commodity strategies at TD Securities, said, adding that it was helping gold.
Lower interest rates decrease the opportunity cost of holding bullion.
Markets widely expect the Fed to hold rates unchanged at its policy meeting on Jan. 30-31 and are expecting a 89% rate cut by May, according to the CME FedWatch Tool.
Gold also got some support from a separate report that showed initial claims for state unemployment benefits in the United States increased 25,000 to a seasonally adjusted 214,000 for the week ended Jan. 20. Economists had forecast 200,000 claims in the latest week. “The initial jobless claims data says that the jobs picture is deteriorating, labour markets cooling, that is helping gold,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
Focus now shifts to the U.S. personal consumption expenditure (PCE) data due on Friday.
Spot silver rose 1.4% to $22.97 per ounce, while platinum dipped 0.7% to $892.35 and palladium fell 1.1% to $952.35.
(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru)
Download The Economic Times News App to get Daily Market Updates & Live Business News.
Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price