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Gold Prices Unchanged On The Day As U.S. PCE Core Inflation Rises To 2%

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(Kitco News) - Gold prices remain relatively unchanged on the day as inflation pressures rise to the Federal Reserve’s 2% inflation target last month.

Friday, The U.S. Department of Commerce said that Personal Consumption Expenditures Index, 0.2% in May, in line with expectations. For the year, the data showed that inflation increased by 2.3%, up from April’s reading of 2.0%.

Core inflation, which strips out volatile food and energy prices and is the U.S. central bank’s preferred inflation measures, increased 0.2% last month, also in line with expectations. Annual inflation increased to 2.0% last month, up from 1.8% from April’s reading. This is the highest inflation reading since April 2012.

However, many economists are expecting inflation to rise past 2.0% as the Fed has said that it sees a “symmetrical rise” in inflation.

The gold market has been under significant pressure throughout the week and is seeing little reaction to the inflation data. August gold futures last traded at $1,252.20 an ounce, up 0.10% on the day. 

Kathrine Judge, senior economist at CIBC World Markets, said that the latest inflation data supports the case that the U.S. central bank will raise interest rates two more times this year.

However, as inflation and economic uncertainty increases, U.S. consumers are keeping a closer eye on their wallets.

The report showed that U.S. consumers saved more as they saw a rise in income. The data showed that personal spending increased 0.2%, down compared to April’s rise of 0.6%. Economists were expecting to see an increase of 0.4%.

On the wage front, the data said that personal income increased 0.4%, in line with expectations.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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