Morning Snapshot: Gold dips on GDP beat, but underpinned by political/geopolitical risks
Gold dipped briefly on this morning’s Q2 GDP beat. However, downticks have been limited thus far amid persistent political and geopolitical risks.
U.S. Q2 GDP was revised up to 3.0%, above expectations of 2.8%, versus a 2.6% preliminary read and 1.2% in Q1. This may lead to a rise in December rate hike expectations, but September remains off the table.
President Trump tweeted this morning that “Talking is not the answer!” when it comes to North Korea. It’s unclear at this point what the President thinks might work, but this might easily be interpreted as a threat of military action.
The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!
— Donald J. Trump (@realDonaldTrump) August 30, 2017
The dollar has rebounded after setting 32-month lows yesterday, which is weighing on gold. However, the correction in the greenback will likely be sold as a selling opportunity. If the dollar remains in a downtrend, it will continue to provide a tailwind for gold.