U.S. Economic Growth Slows to 1.5% in 2Q, Gold Trends Higher

The U.S. economy slowed in the second quarter, falling to a 1.5% GDP growth rate from 2.1% in the first quarter, according to an advance estimate from the Bureau of Economic Analysis. Gold traded higher following the news, punching to a five-day high.

Gold has been trending higher in recent weeks and is showing signals of a potential upside breakout ahead. The $4,000 level has acted as a strong floor and minor dips below that level in recent weeks were quickly used as buying opportunities.

A slowdown in economic growth if it were to continue and spillover into labor market weakness could prevent the Federal Reserve from hiking interest rates in the months ahead, which would be gold-positive.

Digging into the second quarter GDP data

Overall, the softer economic growth reveals some of the impact in the April-June period from the fallout from the Iran war, which has significantly raised energy costs and inflation.

A gallon of gasoline averaged $4.22 in the second quarter, AAA said. That compares to less than $3 a gallon before the U.S. and Israel launched the Iran war in February. U.S. companies have reported that Americans are looking for value when they shop and have become increasingly sensitive to rising prices.

What’s still pushing the economy forward? More than half of the real growth seen in the second quarter came from businesses buying IT and software needed to build data centers.

The Fed’s preferred inflation report cooled in June

In a new release, the closely watched personal consumption expenditure (PCE) fell by 0.1% in June to a 3.7% annual inflation rate, the Commerce Department said. That is a drop from May’s 4.1% inflation reading.

Watch what the Fed does, not what it says

Inflation has stubbornly remained above the Fed’s 2% target for over five years. Despite the above-target inflation, the Fed decided not to make any moves at its July meeting. Typically, the central bank would increase interest rates if they were trying to bring inflation down.

Fed Chairman Kevin Warsh continues to talk tough on inflation, but has yet to take any direct moves to try to lower it. Warsh was nominated by President Trump, who has made clear his preference for lower interest rates, not higher. Generally, gold benefits from steady to lower interest rates, because the metal pays no interest. On the flip side, a rising interest rate environment can weigh on bullion.

Buy an umbrella when the sun is shining

While growth slowed in the second half, the U.S. economy is still growing. The stock market has come under pressure in recent weeks, amid concerns an AI-fueled technology bubble is brewing, but the market has not crashed. While there may be some clouds on the horizon, the sun is still peeking out and shining through.

As the saying goes, the best time to buy an umbrella is when the sun is shining. Today that umbrella could be interpreted as an allocation to precious metals. When the economy falls into recession, gold climbs. When the stock market tanks, gold climbs. When wars break out, gold climbs. Gold is the ultimate safe-haven and has helped investors protect and grow their wealth for thousands of years.

Now is the time to review your portfolio and consider diversifying or increasing your allocation into the safety of gold. Precious metals have a proven track record of helping portfolios retain value and be more resilient during difficult market environments and stock market downturns. Gold is on the move, meaning today’s price could be the lowest of 2026. Do you own enough? Take action today.