(Kitco News) - After a solid recovery in overnight trading, the gold market is back above a critical support level and is holding firm, even as inflation pressures rise in line with expectations.
The Commerce Department's core Personal Consumption Expenditures (PCE) price index, which excludes volatile food and energy prices, rose 0.3% in June, following a 0.2% increase in May.
Meanwhile, annual inflation came in slightly hotter than expected, rising 2.8% over the last 12 months. According to consensus estimates, economists had anticipated a 2.7% increase.
Headline inflation rose 0.3% last month. Over the past year, consumer prices have held steady at 2.6%.
The gold market is not seeing much reaction to the latest inflation data. Spot gold last traded at $3,307.80 an ounce, up 1% on the day. The metal is seeing a solid rebound from Wednesday’s sharp selloff after Federal Reserve Chair Jerome Powell injected some doubt into market expectations for a potential rate cut in September.
Looking at the inflation figures, some economists noted that the relatively in-line data provides little direction for U.S. monetary policy. Although inflation remains above the Federal Reserve’s 2% target, it is not significantly out of step with expectations.
However, the report also indicates that consumers are continuing to slow their spending. Personal income rose 0.3% last month, compared to May’s 0.4% decline. Income slightly exceeded expectations, as economists had forecast a 0.2% increase.
Meanwhile, personal spending increased 0.3%, up from a 0.1% drop in May. However, the gain fell short of expectations, as consensus forecasts had called for a 0.4% rise.
