GDP Above Expectations Could Pressure Gold, Miners as Fed Holds Off Stimulus (GLD) (GDX) (GG)

July 27, 2012 9:40 AM EDT
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Gold prices might see a little pressure Friday, following better than expected growth numbers for the U.S. in the second quarter of 2012.

Data from the U.S. Commerce Department showed GDP rose just 1.5 percent in the second three months of 2012, compared with expectations calling for a 1.4 percent gain. The number comes in following a revised 2 percent gain in 2012's first quarter.

Housing purchases also grew at the slowest pace in one year, moving just 1.5 percent higher from 2.4 percent in the prior quarter. The metric accounts for 70 percent of the total GDP.

But, with the lowered number, gold may pare gains. Next Wednesday, the FOMC is expected to make a rate decision. Speculation earlier in the week pointed to Bernanke & Co. making moves to stimulate the economy as soon as next week. Given recent jobs data, news out of Europe, and slowing growth in the housing sector, no one would blame them.

However, with Q2 GDP already outpacing expectations, the Fed might hold off on further easing until its September decision. The minutes released from its June meeting indicated that some members though more action would need to be taken, as in "when" and "how," not "if."

For gold, this means that prices to the rest of the world will remain higher as the dollar eschews further devaluation. One hope is that other economies like China, Brazil, and Europe, will see central banks ease policies further to spur growth, though it will take some months before any moves are realized.

On the Comex, August gold contracts -- the most actively traded -- are $6.8 higher to $1,621.9 per ounce, down from $1,628.6 per ounce earlier.

ETFs on the watch include SPDR Gold Shares (NYSE: GLD) and Market Vectors Gold Miners ETF (NYSE: GDX), with miners like Goldcorp (NYSE: GG), Barrick Gold (NYSE: ABX), Newmount (NYSE: NEM), AngloGold Ashanti (NYSE: AU), NovaGold (AMEX: NG), and Yamana (NYSE: AUY) also in sights.

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