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Gold Remains Softer After U.S. CPI Rises 0.2% During May

Kitco News

Editor's Note: Updating earlier story with more details from report.

(Kitco News) - Gold prices were unfazed, remaining modestly softer after a Labor Department report Tuesday showing that U.S. consumer prices rose by a seasonally adjusted 0.2% in May.

The core index for CPI, excluding the volatile food and energy sectors, was also up 0.2%.

Going into the report, consensus expectations compiled by news organizations had been for a rise 0.2% in both the headline figure and the core rate.

As of 8:31 a.m. EST, Comex August gold was last down $4 to $1,299.10 an ounce. The metal had been at $1,297.50 one minute ahead of the CPI report.

The Labor Department blamed the CPI increase largely on higher energy costs. The index for gasoline prices climbed 1.7%, more than offsetting declines in some of the other energy component indexes and led to a 0.9% rise in the energy index. The medical-care index rose 0.2%, the food index was unchanged and the shelter index was up 0.3%.

“Compared to the softer print seen in April, May's somewhat stronger core gain was aided by medical care commodities and new car prices,” said Andrew Grantham of CIBC Economics.

“However, airline fares continued to decline (minus 1.9% on the month and minus 6.6% year-over-year) to weigh slightly on the core figure. Overall these figures are in line with expectations and as such shouldn't move markets much today or change the debate for policymakers ahead of the FOMC [Federal Open Market Committee] meeting tomorrow.”

On a 12-month basis, the overall index rose 2.8%, continuing its upward trend since the beginning of the year, the government said. The core index for all items less food and energy rose 2.2% for the 12 months ending May. The food index increased 1.2%, and the energy index rose 11.7%.

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