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Gold price remains under pressure as U.S. annual core PCE beats expectations in January

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(Kitco News) Gold ticked up but continued to trade under pressure after the U.S. annual core PCE price index came in above expectations in January, advancing 1.5% versus the expected 1.4%.

On a monthly basis, the core PCE price index was up 0.3% in January, 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.

The report also showed that real personal consumption was up 2% in January. December’s data was downwardly revised to a drop of 0.8%. Personal income was up 10% last month. Economists were expecting to see a rise of 9.5%.

“The increase in personal income in January was more than accounted for by an increase in government social benefits to persons as payments were made to individuals from federal COVID-19 pandemic response programs,” the report said.

Gold edged up but was largely unchanged following the data released, trading under pressure amid rising 10-year Treasury yield. April Comex gold futures were last trading at $1,761.1, down 0.81% on the day. Earlier in the session, gold hit fresh eight-month lows.

“Rising government bond yields that are at least short-term bearish for the precious metals markets and a good bounce in the U.S. dollar index Friday are weighing on the precious metals markets,” said Kitco’s senior analyst Jim Wyckoff.

Economists project another rise in spending in the spring as well.

“The personal spending data for January confirmed that U.S. households went on a spending spree following the arrival of fresh fiscal stimulus,” said CIBC Capital Markets economist Katherine Judge. “New Covid cases have leveled off lately, which risks placing a pause on re-opening plans in the short term. But by the spring, high rates of vaccinations and immunity should allow the re-opening to accelerate and further fiscal stimulus will be on the way, which portends another surge in spending.”

Live 24 hours gold chart [Kitco Inc.]

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