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Gold price edges up as U.S. annual core PCE meets expectations in May

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(Kitco News) Gold advanced after the U.S. annual core PCE price index came in at 3.4% in May, in line with markets forecasts.

On a monthly basis, the core PCE price index was up 0.5% in May versus the expected 0.6%, according to the data published by the U.S. Department of Commerce on Friday.

The core inflation strips out volatile food and energy prices and is the U.S. central bank’s preferred inflation measure.

Gold edged up following the data released. August Comex gold futures last traded at $1,789.70 an ounce, up 0.73% on the day.

The report also showed that real personal consumption was down 0.4% in May. April data was upwardly revised to an increase of 0.3%. Personal income was down 2% last month. Economists were expecting to see a drop of 2.5%.

“The decrease in personal income in May primarily reflected a decrease in government social benefits. Within government social benefits, ‘other’ social benefits decreased as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in April. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program,” the report said.

May’s figures are unlikely to have much of an impact on the Federal Reserve because the rise in inflation was largely expected by the central bank.

“The acceleration in inflation has been anticipated by the Fed and is being amplified by base effects, suggesting that the Fed will look through the temporary increase and focus on the recovery in the labor market,” said CIBC Capital Markets economist Katherine Judge.

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