Gold Prices Push Into Positive Territory After In-Line Rise In U.S. CPI
(Kitco News)- Gold prices have turned positive on the day as marketsdigest a steady increase in U.S. inflation pressures.
Tuesday, the U.S. Labor Department said its U.S. ConsumerPrice Index rose 0.2% in February, after increasing 0.5% in January. Theincrease was stronger than expected as consensus forecasts were calling for a0.2% increase.
For the year, headline inflation increased 2.2%, the report said.
"The indexes for shelter, apparel, and motor vehicle insurance all rose andcontributed to the 1-month seasonally adjusted increase in the all items index," the report said.
Monthly core inflation, which strips out volatile food and energy costs, rose 0.2%, following a 0.3% increase in January. Economists wereexpecting to see a 0.2% rise in price pressures.
Annually, core inflation rose 1.8%. While not the Federal Reserve's preferred inflation measure, the data shows that price pressures are slowly moving towards the central bank's 2% target.
Gold prices were under modest selling pressure ahead of dataand have moved into slight positive territory in initial reaction. April goldfutures last traded at $1,322.8 an ounce, up 0.15% on the day.
Gold prices have struggled to find momentum as marketsprepare for next week's Federal Reserve monetary policy meeting. The centralbank is widely expected to raise interest rates 25 basis points. However,markets are anxious to see how aggressive the bank will be on further ratehikes through the year.
Avery Shenfeld, senior economist at CIBC World Markets, saidthat while headline inflation is expected to rise, he is not expecting to seethe Federal Reserve to aggressively raise interest rates this year.
“Tame core goods prices continue tokeep inflation at bay, a reflection of the remaining global economicslack offsetting a tightening US economy,” he said. “With core PCE pricesstill comfortably below target, the Fed has no reason to get any moreaggressive on rate hikes than its current dot-plot foreacst already builds in.”
By Neils ChristensenFor Kitco News
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