Gold Inches Higher After U.S. CPI Rises 0.2% During August
Editor's Note: Updating earlier story with more details from report, comments from analyst.
(Kitco News) - Gold prices ticked from slightly lowerto modestly higher Thursday after a softer-than-forecast government reportshowing U.S. consumer prices increased by a seasonally adjusted 0.2% duringAugust.
The core index for the Consumer PriceIndex, excluding the volatile food and energy sectors, was up 0.1%. The Bureauof Labor Statistics said this was the smallest increase since April.
Going into the report, consensusexpectations compiled by news organizations had been for a rise 0.3% in theheadline figure and 0.2% in the core rate.
As of 8:48 a.m. EST, spotgold was $3 higher at $1,209.10 an ounce. The metal had been at $1,205.20 twominutes before the CPI report.
“Today's CPI figures echoed some of the softness seen inproducer prices yesterday, with both headline and core measures coming in belowconsensus expectations,” said Andrew Grantham of CIBC Economics.
Increases in shelter and energy costs were the maincontributors to the increase in overall CPI, the Labor Department said. Theenergy index increased 1.9% in August, including a 3% gain in the gasolineindex. The shelter index rose 0.3 percent in August.
On a year-on-year basis, overall CPI rose 2.7%, the Bureauof Labor Statistics said. The core rate was up 2.2%.
While the report was softer than forecast, Grantham pointed outthat core CPI is still consistent with core personal consumption expendituresrunning only slightly under the Fed's 2% target. As a result, the data “won'tchange the near-term debate regarding rate hikes,” Grantham said.“However, if core inflation doesn't pick up more meaningfully next year, that would resultin an even more gradual pace of rate hikes.”
As a result, he concluded, the CPI data may be “slightlynegative” for the U.S. dollar and long-term yields may “fall a little.”
By Allen SykoraFor Kitco News
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