Gold Boosted By Weak Q4 GDP Print
Gold jumped in early New York trading on Wednesday, boosted by a much weaker than expected Q4 advance GDP print. The first estimate of US Q4 GDP was -0.1%, on expectations of +1.2%. It would seem worries over the fiscal cliff and debt ceiling apparently were a bigger headwind than anticipated.
A big decline in defensive spending was a significant contributing factor, along with inventory builds and an $8.8 bln decline in net exports. While the Q4 contraction is a preliminary number, the possibility of a return to recession is back on everyone's mind. Weaker GDP was broadly anticipated in Q1, and the Q4 miss will likely result in downward revisions to expectations for early 2013. The expiration of the payroll tax cut has already weighed considerably on consumer sentiment.