In terms of growth, the US economy is a notable outlier, still clearly echoing resilience. This is vastly different from the UK (technical recession) and the euro area (stagnating).

According to the second estimate (or preliminary estimate), the US economy increased at an annualised rate of 3.2% in Q4 2023, a level consistent with economic growth and far from an economy slipping into recessionary territory. However, the preliminary release was a slightly revised rate of growth, down from the 3.3% government’s initial estimate (advance)—this also follows a 4.9% print in Q3 2023—though it remains in a solid position and one that bolsters the case for a higher-for-longer narrative in rates.

Since the last FOMC meeting, as already noted, headline inflation slowed in the twelve months to January (albeit not as much as economists estimated), and the labour market remains in fine form. This has seen Fed rate pricing being pushed out from March to May to June and as of writing, now to July for the first 25bp rate cut, according to the futures and OIS markets. However, there remains a 50/50 probability of a rate cut still occurring in June, with only 78bps of easing priced in for the year (or three rate cuts which is now in line with the FOMC’s dot-plot projections).

As per the Bureau of Economic Analysis (BEA), ‘the update primarily reflected a downward revision to private inventory investment that was partly offset by upward revisions to state and local government spending and consumer spending’, and the increase in real GDP was largely underpinned by consumer spending; personal consumption grew at a 3.0% annual pace in Q4 2023, up from 2.8% in the initial estimate.

Digging deeper into the metrics, non-residential investment increased to 2.4% in the preliminary estimate, up from 1.9% in the initial print, with residential and government spending also expanding at 2.9% (from 1.1%) and 4.2% (from 3.3%), respectively.

XAU/USD Remains Toying with Resistance

We saw a moderate spike higher in spot gold (XAU/USD), though gains were short-lived, and the price has since reclaimed pre-announcement levels. In a recent analysis, the FP Markets Research Team noted that the price of gold has tested the mettle of daily resistance coming in at $2,038 and has struggled to find a way north of the base since late last week. However, according to the longer-term trend favouring bids and room to move higher on the weekly timeframe, an eventual breakout to the upside remains on the table according to the technical picture, targeting weekly resistance at $2,075.

Daily Chart of XAU/USD:

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