Make Kitco Your Homepage

Gold prices testing resistance around $2,000 as U.S. PCE core inflation rises 0.3% in February, up 4.6% for the year

Kitco News

Editor note Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) - The gold market is again testing resistance at $2,000 an ounce as U.S. inflation pressure cools more than expected in February.

Friday, the U.S. Department of Commerce said its core Personal Consumption Expenditures price index increased 0.2% last month, compared to January's increase of 0.5%. The data was slightly weaker than expected, as economists were forecasting a 0.4% rise.

In the last 12 months, core PCE inflation rose 4.6%, below expectations, to hold steady at 4.7%.

Core PCE, which strips out volatile food and energy prices, is the Federal Reserve's preferred inflation guide.

The gold market is seeing some renewed momentum in its initial reaction to the latest inflation data. June gold futures last traded at $2,003.70 an ounce, up 0.30% on the day.

At the same time, the report also noted a drop in headline inflation is also seeing a slower rise, increasing by 0.3% in February, compared to January's 0.6% increase. Annual inflation also continues its downward trend, rising by 5%, compared to January's increase of 5.3%.

According to some analysts, gold is seeing some new bullish momentum as the latest inflation data could confirm that the Federal Reserve is done raising interest rates. The CME FedWatch Tool shows that markets see a nearly 54% chance that the U.S. central bank will leave interest rates unchanged after its meeting in May.

"These numbers should give the Fed a bit more confidence that hiking just 25 bps at the last meeting was the right call and that there's no need (for now) to hike above 5.25%," said Adam Button, chief currency strategist at

Meanwhile, markets are still pricing in a rate cut in June.

The report notes that the drop in inflation pressures comes as economic activity continues to slow, with consumers buying less and saving more. The report said personal spending increased 0.2% in February, compared to January's increase of 1.8%. The spending data missed expectations as economists were looking for a rise of 0.3%.

At the same time, personal income rose 0.3% last month; economists expected a 0.2% rise.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.