Make Kitco Your Homepage

Gold prices struggling to stay positive following weak consumption data, rise in inflation

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - Gold prices are struggling to hold on to small gains Friday after U.S. inflation pressures rose higher-than-expected as the nation continues to struggle with the economic impact of the COVID-19 pandemic.

In its latest report, the Department of Commerce said that the core Personal Consumption Expenditures Index rose 0.1% in May, up from the 0.4% decline reported in April. The data was stronger-than-expected as economics were forecasting an unchanged reading. For the year, core PCE was unchanged, rising 1.0% last month.

The gold market dipped into negative territory on the day in initial reaction to the latest inflation data. August gold futures last traded at $1,770.20 an ounce, relatively unchanged on the day.

The data also shows that U.S. consumers continue to struggle as the nation tries to deal with the economic fallout of the coronavirus. The report said that personal spending rose 8.2% last month, up from April’s revised decline of 12.6%. However, the rise was weaker than expected as consensus forecasts were calling for an increase of 8.9%.

The report did show a slight improvement in personal income last month. Income dropped 4.2% in May, down from April’s revised increase of 10.8%. The drop was less than expected as economists were forecasting a drop of 6%.

Jim Wyckoff, senior technical analyst at Kitco.com said that gold prices are not reacting much to the latest economic data. He explained that gold is seeing some technical selling pressure after prices hit a nearly 8-year high earlier in the week.

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.