(Kitco News) - Gold prices have pushed back above $3,300 an ounce and could continue to find support at what has become an important psychological level, as inflation pressures were muted last month.
The Core Personal Consumption Expenditures (PCE) index—which excludes volatile food and energy prices and is the Federal Reserve’s preferred inflation gauge—was unchanged in March, following February’s 0.4% increase, the U.S. Department of Commerce reported Wednesday. Consumer prices came in weaker than expected, as economists had anticipated a 0.1% increase.
Over the past 12 months, core inflation rose by 2.6%, down from February’s revised annual increase of 3.0%. Economists had forecast an annual increase of 2.6%.
Although gold continues to face some modest selling pressure, disappointing economic data has provided renewed momentum, with prices climbing back above $3,300 an ounce. Spot gold last traded at $3,304.40 an ounce, roughly flat on the day.
Ahead of the latest inflation release, U.S. economic data revealed weak private-sector employment growth and the economy contracting for the first time in three years.
According to some analysts, weak growth and cooler inflation give the Federal Reserve room to resume its easing cycle. However, markets still expect the U.S. central bank to leave interest rates unchanged at next week’s monetary policy meeting.
The report also noted U.S. consumers were in relatively good shape as both income and consumption increased. Personal income increased 0.5%, compared to February’s 0.8% increase. Economists were looking for a 0.4% increase.
At the same time, personal spending increased 0.7%, following February's increase of 0.4%. Economists were expecting to see a 0.6% increase.
