XAU/USD fell amid the unexpected outcomes of US economic data

Gold Fundamental Analysis

XAU/USD is trading at 1,986.71, down by 0.14% in a day. The price of gold was rising in the previous session due to the high demand for safe-haven. However, XAU/USD declined dramatically as the dollar gained momentum after shocking US economic data that showed the economy grew 1.1% in the first quarter.

Key Takeaways:

  • XAU/USD dropped as the US dollar rose after GDP data.
  • Renewed banking crisis concerns in the United States constrained gold’s price drop.
  • China’s gold mining surges as demand rises, returning to pre-pandemic levels.


The first quarter of 2023 saw the US GDP expand by only 1.1%, much below expectations of 2.0%, and a dramatic decline from the 2.6% growth seen in the last quarter of 2022. Additionally, US unemployment claims decreased to 230 thousand in the week ending April 22, marking the first weekly decrease in three weeks. The number topped predictions of 247 thousand and was down from the prior reading of 246 thousand.

However, the dollar increased as statistics indicated that the Federal Reserve is not going to hold off on raising interest rates next week despite the US economy growing less than anticipated in the first quarter. Furthermore, the likelihood of a 25bp hike at the FOMC meeting next week is currently 80%.

The dollar index (DXY) changed direction and increased 0.25% to 101.71. The strong dollar put pressure on the XAU/USD.

Anxiety in the stock market helped XAU/USD

First Republic Bank (FRC), the struggling bank, saw its shares drop another 30% on Thursday. Furthermore, the FRC’s rising concerns caused market sentiment to decline. A risk-off selloff occurred in each sector except for technology stocks due to the FRC’s ongoing selloff and the growing anxiety over it will impact other banks.

As stock market fear has grown, people have been more inclined to view gold as a safe haven. As a result, it capped the XAU/USD decline.

China’s gold output recovers

On Tuesday, the China Gold Association said China’s gold output has returned to pre-pandemic levels. Moreover, the demand for precious metals and jewelry increased during the first quarter as customers ran for safe havens away from jittery financial markets.

Following the failure of two banks in the US and the need to save Credit Suisse in Europe, investors started fleeing risk, which led to an increase in demand for gold bars and coins.

Moreover, the People’s Bank of China acquired gold for the fifth consecutive month in March, raising its holdings by 57.85 to 2,068.38 tonnes. this news drove the gold prices higher in the initial session of the market.

You cannot always control what goes on outside. But you can always control what goes on inside.

Wayne Dyer