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Gold Prices Push Into Positive Territory As U.S. Core PCE Hits 2%

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(Kitco News) - Gold prices have pushed into positive territory after inflation pressures have officially hit the Federal Reserve's target.

Thursday, U.S. Department of Commerce said that its Core Personal Consumption Expenditures Index, increased also increased 0.2% in July, in line with expectations. Annually, core inflation, which is the Fed's preferred inflation measure increased a tick higher to 2%, up from June's reading of 1.9%.

This is the first time inflation has hit 2% since 2012.

headline inflation, increased 0.1% last month, in line with expectations. For the year, inflation pressures increased 2.3%.

Gold prices were in negative territory ahead of the data and has pushed into the green in initial reaction. December gold futures last traded at $1,211.90 an ounce, up 0.03% on the day.

Along with rising inflation pressures, the report said that personal spending increased 0.4% last month, in line with expectations. At the same time personal income increased 0.3%, also meeting expectations.

Economists have described the latest economic data as solid and support the Federal Reserve’s outlook for further growth in the second half of the year.

"As things stand, real consumption is on track for a gain of between 3% and 3.5% annualised in the third quarter, and we expect that overall GDP will expand at a similar rate too," said Andrew Hunter, U.S. economist at Capital Economics.

Katherine Judge, senior economist at CIBC World Markets said that the rise in annual core inflation supports expectations that the Fed will raise interest rates next month.

“This is still consistent with a solid consumption outlook but suggests that Q3 will see slower household spending growth than the strong pace seen in Q2,” she said.

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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