(Kitco News) - The gold market is losing ground, with prices dropping below $2,650 an ounce as inflation remains stubbornly elevated,
The U.S. Department of Commerce reported Wednesday that its core Personal Consumption Expenditures (PCE) index increased by 0.3% last month, compared to September’s increase of 0.3%. The data rose in line with expectations.
The report noted that in the last 12 months core inflation rose 2.8%, up from the previous reading of 2.7%.
Persistently elevated inflation appears to be taking its toll on the gold market as it sees its gains pared. December gold futures last traded at $2,642 an ounce, up 0.79% on the day. Gold prices were up above 1% ahead of the inflation data.
According to some economists, the rise in the Federal Reserve’s preferred inflation gauge could be enough to force the central bank to leave interest rates unchanged next month.
The report said that headline inflation rose 0.2%, in line with expectations. For the year inflation rose 2.3%, up from 2.1% reported in September.
Although inflation pressures have picked up the report also noted that consumers saw a solid increase in their wages. Personal income rose 0.6%, up from September’s increase of 0.2%. The data was better than expected as economists were looking for a 0.4% increase.
Meanwhile, consumers continue to spend. The report said personal spending rose 0.4%, down compared to September’s increase of 0.6%.
Stephen Brown, Deputy Chief North America Economist at Capital Economics, said that the Federal Reserve’s rate cuts are balancing on a knife’s edge and it will be important to pay attention to the data points.
“With the minutes of the Fed’s early November meeting suggesting that some participants could support a pause if inflation remains elevated, the next set of CPI and PPI price data will be pivotal for the Fed’s decision next month,” Brown said.
