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Gold prices holding above $1,930 as U.S. Core PCE rises 0.3% in December; sees 4.4% increase for the year

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(Kitco News) - The gold market remains in neutral territory around $1,930 an ounce as U.S. inflation pressures continue to ease in line with expectations.

Friday, U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.3% in December, following November’s 0.2% increase. The data was in line with economists’ expectations.

For the year core inflation rose 4.4%, in line with economist expectations. Core inflation has dropped compared to November’s rise of 4.7%. Core PCE is the Federal Reserve’s preferred inflation gauge.

The gold market has moved into positive territory in initial reaction to the latest inflation data; however, the price action remains relatively muted. February gold futures last traded at $1,934.80 an ounce, up 0.24% on the day.

While inflation remains persistently high, there are signs that the economy continues to slow. The report noted that personal spending last month dropped 0.2%, missing expectations. According to consensus estiamtes, economists were looking for a 0.1% drop.

At the same time, it appears that consumers saving some money for a rainy day as income increased 0.2%, in line with expectations.

Although inflation pressures remain persistently high, markets remain convinced that the Federal Reserve is closer to the end of its tightening cycle. Markets have all but fully priced in a 25 basis point hike from the Federal Reserve when it meets next week.

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