Gold Prices Push Into Positive Territory As U.S. Core PCE Hits 2%
(Kitco News)- Gold prices have pushed into positive territory after inflationpressures have officially hit the Federal Reserve's target.
Thursday,U.S. Department of Commerce said that its Core Personal ConsumptionExpenditures Index, increased also increased 0.2% in July, in line withexpectations. Annually, core inflation, which is the Fed's preferred inflationmeasure increased a tick higher to 2%, up from June's reading of 1.9%.
Thisis the first time inflation has hit 2% since 2012.
headline inflation, increased 0.1% last month, in line with expectations. For the year, inflation pressures increased 2.3%.
Goldprices were in negative territory ahead of the data and has pushed into thegreen in initial reaction. December gold futures last traded at $1,211.90 anounce, up 0.03% on the day.
Alongwith rising inflation pressures, the report said that personal spendingincreased 0.4% last month, in line with expectations. At the same time personalincome increased 0.3%, also meeting expectations.
Economistshave described the latest economic data as solid and support the FederalReserve’s outlook for further growth in the second half of the year.
"As things stand, real consumption is on trackfor a gain of between 3% and 3.5% annualised in the third quarter, and weexpect that overall GDP will expand at a similar rate too," said Andrew Hunter, U.S. economist at Capital Economics.
Katherine Judge, senior economist at CIBC World Markets said thatthe rise in annual core inflation supports expectations that the Fed will raiseinterest rates next month.
“This is still consistent with a solid consumption outlook butsuggests that Q3 will see slower household spending growth than the strong paceseen in Q2,” she said.
By Neils ChristensenFor Kitco News
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