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Gold prices remain under pressure as annual core PCE inflation rises 5.2%

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(Kitco News) - Gold prices remain under pressure even as U.S. inflation pressure continue to rise more than expected.

On a monthly basis, the core PCE price index, which exclude energy and food, was up 0.5% last month, the U.S. Department of Commerce said Friday. The inflation data was in line with consensus estimates.

However, for the year core PCE jumped 5.2%, up from last month’s reading at 4.9%. According to consensus estimates, economists were expecting to see core inflation around 5.1%.

The gold market is struggling to find new bullish momentum after Thursday’s volatility where prices swung in a $96 range. April gold futures last traded at $1,895.70 an ounce, down 1.60% on the day.

Overall, the report said that headline PCE inflation rose 0.6% in January, up from December’s reading of 0.5%. For the year inflation increased 6.1%, up from December’ annual increase of 5.9%.

Russia's invasion in Ukraine won't stop the Federal Reserve from raising rates - analysts

The report noted that energy prices increased 25.9% while food prices increased 6.7%.

Not only are consumer facing rising prices, but the report also noted that income was flat last month. Personal income was slightly better than expected as economists were looking for a 0.3% decline for the month.

While income was flat in January, consumption still increased with personal spending rising 2.1%. Economists were expecting to see a 1.6% increase.

Economists note that inflation remains a growing threat to economic growth as consumer purchasing power dwindles. Although Russia’s invasion of Ukraine has added some uncertainty into the global economy, many economists expect that the Federal Reserve will tighten monetary policy to rein in inflation. However, the U.S. central bank might not be as aggressive as markets are expecting.

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