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Gold price trades below $1,800 as key inflation indicator remains steady

Kitco News

(Kitco News) Gold dropped after the U.S. annual core PCE price index came in at 3.6% in September versus the consensus forecast of 3.7%. The index has been at 3.6% since June.

On a monthly basis, the core PCE price index was up 0.2% as expected in September, 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.

The report also showed that personal spending was up 0.6%, while personal income declined 1% in September. Real personal consumption was up at 0.3% last month after rising 0.6% in August. 

“The decrease in personal income in September primarily reflected a decrease in government social benefits, both in unemployment benefits and ‘other’ benefits,” the report said.

The data showed Fed’s preferred inflation measure holding steady, said CIBC Capital Markets senior economist Katherine Judge.

“When compared to its pre-pandemic level, which eliminates base effects, it still looked hot at 2.7% annualized, supporting the Fed's pending decision to begin tapering bond purchases. The 1.0% drop in incomes (vs. -0.3% consensus) reflected the end of expanded unemployment benefits early in the month, while spending decelerated to 0.6%, leaving the savings rate at 7.5%, roughly in line with pre-pandemic norms,” said Judge.

Gold retreated below the $1,800 an ounce level following the data release. December Comex gold futures were last trading at $1,782.70 an ounce, down 1.10% on the day.

Live 24 hours gold chart [Kitco Inc.]

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