The close movement between gold and the dollar, typically seen as defensive assets, is currently signaling a potential deep correction in the S&P 500. Historically, when these two assets converge in behavior, it often precedes significant downturns in the stock market, suggesting that investors should brace for possible declines.

Gold prices experienced a notable increase on Thursday, primarily driven by a declining U.S. dollar. Investors are now closely monitoring upcoming U.S. economic data, which could provide significant insights into the Federal Reserve's future interest rate decisions. As of midday in London, spot gold climbed 0.6% to reach $2,328.61 per ounce. Meanwhile, U.S. gold futures saw a modest rise of 0.1%, settling at $2,341.00 per ounce.

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The U.S. economy started the year on a weaker note than anticipated, with the GDP growth rate decelerating to 1.6% in the first quarter, as reported by the Commerce Department. This figure significantly undershot the 2.4% growth economists had projected based on surveys by Dow Jones. The Gross Domestic Product (GDP), which gauges the total output of goods and services, showed a marked slowdown from the 3.4% increase in the final quarter of 2023 and the 4.9% rise in the quarter before that. While consumer spending did grow by 2.5%, it was less robust compared to the 3.3% increase in the previous quarter and also fell short of the 3% expected by Wall Street analysts.