Gold prices edged lower on Thursday following strong US economic data for the fourth quarter of 2022, though indications of a likely slowdown limited losses in the safe-haven metal.

Spot gold was down 1.1% to $1,925.48 per ounce by noon ET, having reached a nine-month high of $1,949.08 earlier in the day. US gold futures fell 0.9% to $1,925.40 per ounce in New York.

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New GDP data shows that the US economy maintained a strong pace of growth in the last quarter as consumers boosted spending on goods, but momentum appears to have slowed considerably towards the end of the year, with higher interest rates eroding demand.

The US dollar index held most gains following the data, but the reaction was relatively muted, as it was still in proximity of an eight-month low.

“While gold is still somewhat pressured by the fact that the data has given the Fed room to be higher for longer, on the other hand, concerns about a slowdown, especially with recent headlines on layoffs, are limiting the downside,” Tai Wong, a senior trader at Heraeus Precious Metals in New York, told Reuters.

“This is giving bulls the momentum backed by strong technical moves in the past couple of months,” Wong added.

The latest data likely sets the tone heading into the Fed’s policy-setting committee’s two-day meeting next week, analysts say.

Markets have priced in a 25-basis-point (bps) interest rate hike, a step down from the 50 bps and 75 bps increases seen last year.

According to independent analyst Ross Norman, the core personal consumer expenditure numbers on Friday ahead of the meetings next week will be playing on the minds of bulls as well as bears.

(With files from Reuters)

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