(Kitco News) - Weaker inflation pressure is creating some holiday cheer in the gold market as prices continue to hold support at around $2,600 an ounce.
The Core Personal Consumption Expenditures (PCE) index, which excludes volatile goods and energy prices and is the Federal Reserve’s preferred inflation gauge, increased by 0.1% last month compared to October’s increase of 0.3%, the U.S. Department of Commerce reported Friday. The data came in slightly weaker than expected, as economists had forecast a 0.2% increase.
Over the last 12 months, inflation rose 2.8%, unchanged from October’s reading. Annual inflation was also slightly lower than expected, as economists had anticipated a 2.9% increase.
Weaker inflation data is providing some momentum to gold as prices have managed to hold critical support despite significant headwinds. Spot gold futures last traded at $2,607.40 an ounce, up 0.45% on the day.
However, some analysts continue to urge caution in the marketplace, as inflation remains stubbornly elevated, which is forcing the Federal Reserve to slow the pace of rate cuts in 2025.
Headline inflation was also slightly weaker than expected, rising 0.1% in November. Annual inflation rose 2.4%, up from October’s reading of 2.3%.
Although inflation eased a bit last month, the report noted that personal income and spending also dropped. However, some economists note that consumption remains healthy and should continue to support the economy.
“November inflation was more benign than expected, but the stickiness of some categories supports the Fed’s hesitancy to materially lower rates next year. The economy continues to grow from strong consumer demand, as income growth and the wealth effect from higher portfolio values give consumers the capacity to spend,” said Jeffrey Roach, Chief Economist for LPL Financial.
