Gold price above $1,940 as inflation beats expectations in July
(Kitco News) Gold was back to trading flat on the day and above $1,940 an ounce following July’s inflation data, which came above market expectations.
The U.S. Consumer Price Index rose 0.6% in July after advancing 0.6% in June, the U.S. Labor Department said on Tuesday. Consensus forecasts were calling for a rise of 0.3%.
Annualized inflation also came in above expected in July – at 1% after posting a 0.6% advance in June.
Monthly core inflation, which strips out volatile food and energy costs, surprised on the upside as well, coming in at 0.6% in July, which marked the largest monthly price increase in nearly 30 years. Annualized core inflation was at 1.6%, also beating expectations.
The energy index was up 2.5% in July, with the gasoline index rising 5.6%, the report said.
“The gasoline index continued to rise in July after increasing sharply in June and accounted for about one quarter of the monthly increase in the seasonally adjusted all items index … This was partially offset by the food index, which decreased 0.4 percent in July, with the index for food at home declining 1.1 percent,” the report stated.
Economists were not too impressed with the inflation data, despite the numbers beating market expectations for the month.
“While much stronger than expected, that is still well below the readings seen prior to the pandemic. With the recovery in the U.S. appearing to have stalled along with the resurgence of the virus in August, further upwards pressure on prices could have been somewhat limited on the month,” wrote CIBC Capital Markets economist Katherine Judge.
In an immediate reaction to the data, gold prices edged up, attempting to continue their rebound after a major correction on Tuesday. December Comex gold was last trading at $1,946.70, up 0.02% on the day.
Gold bulls are working to stabilize the markets on Wednesday after prices tumbled more than $100 in one day and fell below $1,900 on Tuesday amid risk-on sentiment and profit-taking.