XAU/USD: Gold Prices Rise After 1.1% Slowdown in US Economic Growth

The United States economy flagged its first major recession signal in the first quarter, when it expanded significantly less than anticipated.

Traders and investors offered no more than $1,990 per troy ounce of gold bullion this morning. The lacklustre US economic growth report did not prompt a flight to safety, but analysts are already raising the alarm.

The United States' economic expansion declined dramatically in the first quarter, increasing by only 1.1% year-over-year. The GDP figure came in far below expectations of a 2% increase and was the first significant signal that prompted analysts to predict an imminent recession.

What role does gold play in a recession? In periods of instability, the value of the precious metal tends to increase. In anticipation of large-scale shifts in global economic conditions, money managers, investment funds, and, more recently, central banks have accumulated bullion at the quickest rate in years.