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Gold price near new record highs as U.S. PCE price index rises 0.2% in June

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(Kitco News) Gold was trading near its new record highs as the U.S. core PCE price index rose in line with expectations, advancing 0.2% in June after the same upwardly revised advance in May.

On an annual basis, the core PCE price index was up 0.9% in June after rising 1% in May, the U.S. Department of Commerce said on Friday. The core inflation strips out volatile food and energy prices and is the U.S. central bank’s preferred inflation measure.

Personal Consumption Expenditures (PCE) index was up 0.4% in June. For the year, the data showed that the PCE index advanced 0.8%, up from May’s reading of 0.5%.

Gold prices maintained their gains after the data was released, trading near new record highs. December Comex gold futures were last at $1,993.40, up 1.35% on the day.

The report also showed that personal spending was up 5.6% in June, beating market expectations of 5.5% increase. May’s data was upwardly revised to show an 8.5% advance. 

In contrast, personal income declined 1.1% in June, following a drop of 4.4% in May. Economists were expecting a much smaller drop of 0.5% in June. 

“The decrease in personal income in June was more than accounted for by a decrease in government social benefits to persons as payments made to individuals from federal economic recovery programs in response to the COVID-19 pandemic continued, but at a lower level than in May,” the report said.

Economists said that despite a rebound in consumption in June, they are still concerned about the July figures.

“The 5.6% advance in consumption still leaves it roughly 7% below its pre-virus high in both nominal and volume terms. While it provides a solid starting point for the third quarter, we remain worried about July's consumption print given the stalling seen in high-frequency indicators, as well as the drop in consumer confidence amidst the spread of the virus,” said CIBC World Markets economist Katherine Judge.

Live 24 hours gold chart [Kitco Inc.]

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