Is the U.S. grabbing gold leading to "economic panic"?

Recently, economic activity data in the United States has shown some weakness compared to expectations, with consumer spending slightly declining in January, the trade deficit significantly widening over the past few months, and initial jobless claims rising sharply last week.

As a result, market expectations for U.S. GDP growth in the first quarter have become somewhat pessimistic. The GDPNow model from the Atlanta Federal Reserve predicts that the GDP growth rate for the first quarter has already dropped by more than 4 percentage points, with expectations revised down to an annualized growth rate of -1.5%.

However, the Goldman Sachs analyst team led by Jan Hatzius pointed out in a research report released on March 1 that while a slowdown in U.S. GDP growth this year is highly likely and policy uncertainty brings some downside risks, recent data does not appear to be as bad as it seems. In particular, the surge in gold imports has significantly distorted trade data, leading to overly pessimistic market expectations for first-quarter GDP growth.

Goldman Sachs noted that the widening trade deficit since last November has been primarily driven by the surge in gold imports, which are typically excluded from GDP calculations because they are usually not consumed or used for production.

Goldman Sachs forecasts that the U.S. GDP growth rate for the first quarter of 2025 will be 1.6%, which, although lower than previous expectations, is higher than the Atlanta Federal Reserve's forecast. At the same time, Goldman Sachs maintains its GDP growth forecast for the fourth quarter of 2025 at 2.2%, slightly lower than the initial expectation of 2.4%.

Goldman Sachs: Surge in Gold Imports Will Distort Q1 GDP Data

Goldman Sachs' research report indicates that the main reason for the widening U.S. trade deficit since November 2024 is the increase in gold imports. In January, the U.S. goods trade deficit accounted for more than 6% of GDP.

By analyzing gold inventory data from the New York Commodity Exchange and Swiss customs data, Goldman Sachs estimates that gold imports in January amounted to approximately $25 billion, nearly accounting for the entire $31 billion increase in the U.S. trade deficit. This data indicates that the surge in gold imports has significantly distorted trade data.

This has raised concerns among investors regarding the weakness of first-quarter GDP data, leading the Atlanta Federal Reserve's GDPNow forecast to be sharply revised down to -1.5%.

The report analyzes that these gold imports mainly come from Europe and are a precautionary measure taken by participants in the gold market to mitigate potential tariff risks. In this context, these gold imports are not necessarily from future front-loaded purchases but are intended to ensure quick access when actual delivery is needed, a demand that rarely occurs in practice.

The key point is that the U.S. Bureau of Economic Analysis (BEA) excludes most gold imports when calculating GDP. This is because GDP measures the production of a country or region, and most gold imports are unrelated to U.S. production or consumption, primarily influenced by the demand from participants in the gold market

Not Just the "Pot" of Gold

In addition to the impact of gold imports, Goldman Sachs' research report also analyzes other factors that may lead to "distorted" data:

• Weak consumption may be influenced by multiple factors: The report suggests that the weak consumer spending in January may be the result of multiple factors, including cold weather, seasonal factors, and a normal correction after a rapid increase in consumption in the second half of 2024.
• Increase in unemployment claims may be overestimated: The report points out that unemployment claims data at the beginning of each year usually fluctuates significantly, and seasonal adjustments may be challenging. Additionally, there have been several recent instances of a surge in unemployment claims, which quickly receded.

Considering the above factors, especially the distortion of trade data due to gold imports, Goldman Sachs believes that the market's interpretation of recent data may be overly pessimistic.

Goldman Sachs predicts that the GDP growth rate for the United States in the first quarter of 2025 will be 1.6%, which, although lower than previous expectations, is still much higher than the Atlanta Fed's forecast. At the same time, Goldman Sachs maintains its GDP growth forecast for the fourth quarter of 2025 at 2.2%, slightly lower than the initial expectation of 2.4%