Investing.com - Gold prices extended losses in early morning trade on Thursday after a revision to first-quarter gross domestic product data showed more inflationary pressure than previously thought.
Spot gold lost $6.96, or 0.5%, to $1,402.15 by 9:41 AM ET (13:41 GMT), while gold futures for August delivery on the Comex division of the New York Mercantile Exchange, fell $10.25, or 0.7%, to $1,405.15 a troy ounce.
Although the third estimate of first-quarter growth was unchanged at 3.1%, gold fell and the dollar firmed after a preferred indicator of inflation for the Fed, the personal consumption expenditure (PCE) prices, was revised higher in both its headline and core readings.
With Federal Reserve Chairman Jerome Powell insisting that any future interest rate cut would need to be justified by hard economic data, markets are now more than usually sensitized to such readings.
The downward move in gold occurred despite a generally weak reading from the data set as a whole. Marc Chandler, chief market strategist at Bannockburn Global Forex, indicated in a tweet after the release that he felt second-quarter growth could possibly drop below 2%.
In a separate report, weekly jobless claims were also weaker than expected.
Prior to the data releases, gold prices were already dropping as markets seemed to price in the possibility that China and the U.S. could reach a trade truce at the weekend, something that would reduce demand for haven assets.
The South China Morning Post reported Thursday that Washington and Beijing have “tentatively agreed” on a truce that would put a hold on U.S. President Donald Trump’s pending round of additional tariffs on Chinese goods, which are currently scheduled to come into force next week.
The Wall Street Journal later reported that Chinese President Xi Jinping was planning to present Trump with proposed terms of a settlement designed to put an end to their trade conflict when they meet after the G20 summit at 11:30 AM (2:30 GMT) local time in Osaka on Saturday. That's 10:30 PM ET on Friday.
The WSJ noted however that Beijing was including a list of conditions and it was not clear they would be acceptable to the American president.
In other metals trading, silver futures lost 0.9% to $15.238 a troy ounce by 9:43 AM ET (13:43 GMT).
Palladium futures slipped 0.1% to $1,524.05 an ounce, while sister metal platinum lost 0.4% to $818.45.
In base metals, copper traded down 0.3% to $2.708 a pound.