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Gold price remains under pressure, but largely ignores hotter inflation data as core PCE rises 0.6% in January, annual inflation rises 4.7%

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(Kitco News) - The gold market remains on the back foot but is seeing little movement as rising inflation remains a persistent threat to the economy and remains well above the Federal Reserve's target of 2%.

Friday, the U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.6% last month, up from December's revised reading of 0.4%. Inflation came in hotter than expected, with consensus forecasts looking for a rise of 0.4%.

In the past 12 months, core PCE, the Federal Reserve's preferred inflation gauge, rose 4.7%, up from December's rise of 4.6%. Economists expected annual inflation to rise by a much smaller amount of 4.3%.

The gold market is largely ignoring the latest inflation data as it continues to see some technical selling pressure. April gold futures last traded at $1,821.10 an ounce, down 0.31% on the day.

Currency analysts note that the U.S. dollar Index is currently trading at session highs above 105 points in initial reaction to the inflation data. The greenback is trading at a three-month high against a basket of global currencies.

According to some economists, the hotter-than-expected inflation data could force the Federal Reserve to aggressively raise interest rates once again. Expectations of higher-for-long interest rates continue to take their toll on gold prices as it heads into the weekend with its fifth consecutive weekly loss.

Along with persistently higher prices, the report also noted that consumers continue to dip into their savings to cover their expenses.

The report said that personal income increased 0.6% in January, up from 0.2% in December. However, the data missed expectations as economists were looking for a 1% increase.

At the same time, personal consumption increased 1.8% last month, compared to December's drop of 0.2%. Consumption was stronger than expected, as consensus forecasts called for a 1.4% increase.

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