Gold prices remain on the defensive as the U.S. economy grew in line with expectations in the final three months of the year, according to the latest data from the Commerce Department.
The second reading of fourth quarter gross domestic product showed that the U.S. economy grew by 2.5%, down slightly from the initial estimate of 2.6%. The data was in line with consensus forecasts.
"With this second estimate for the fourth quarter, the general picture of economic growth remains the same," the report noted.
Gold prices are seeing little reaction to the data as it remains at the bottom end of its trading range. The yellow metal was dragged lower following optimistic comments from Fed Chair Jerome Powell, in his first day of testimony before Congress Tuesday. April gold futures last traded at $1,320.20 an ounce, up 0.11% on the day.
Consumers continue to do the heavy lifting to support the economy. The Commerce Department noted that personal consumption increased 3.8% in the fourth quarter, up from the previous estimate of 3.6%.
Business investment was relatively weaker increasing 6.6%, down slightly from the previous increase of 6.8%. The report also showed that trade data continues to weigh on economic growth. Exports increased 7.1% in the fourth quarter, up from the initial estimate of 6.9%; however, imports increased 14%, up from the previous estimate of 13.9%.
Positive for gold, inflation remains elevated. Gold is seen as a traditional hedge against inflation. The GDP price index came in at 2.3%, down slightly from 2.4% reported in the initial estimate. Core Personal Consumption Expenditures remained unchanged at 1.9%.