Gold prices rebounded above the psychologically important level of $1,959 an ounce, as US inflation came out as expected.
The U.S. Commerce Department said the core personal consumption expenditures price index rose 0.2 percent last month. Inflation in the past 12 months increased by 4.1%, down sharply from the increase of 4.6% in June. Inflation remained high, nearly double the 2% target of the Federal Reserve (Fed).
Some analysts believe that inflation is falling in the right direction, making it possible for the Fed to keep interest rates unchanged in September. The possibility of a halt in interest rate tightening continues to support gold prices.
The U.S. Commerce Department said the core personal consumption expenditures price index rose 0.2 percent last month. Inflation in the past 12 months increased by 4.1%, down sharply from the increase of 4.6% in June. Inflation remained high, nearly double the 2% target of the Federal Reserve (Fed).
Some analysts believe that inflation is falling in the right direction, making it possible for the Fed to keep interest rates unchanged in September. The possibility of a halt in interest rate tightening continues to support gold prices.
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According to published data, GDP in the second quarter of the US increased by 2.4% (adjusted on a year-by-year basis). The number of initial jobless claims for unemployment benefits fell by 7,000 from the previous week, the Labor Department said.
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Inflation in the past 12 months increased by 4.1%, down sharply from the increase of 4.6% in June. Annual inflation also decreased slightly compared to economists' expectations (4.2%). Despite the sharp drop in inflation, it is still nearly double the target level that the US Federal Reserve (Fed) is doing everything to achieve.
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Although inflation remains high, some analysts have noted that it continues to fall in the right direction. This could convince the Fed to leave rates unchanged in September. The possibility of the State Bank to stop tightening policy continues to support gold prices.
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Analysts note that growing rifts in consumption are also supporting gold prices. The report notes that personal income has not kept pace with consumption. Specifically, personal income rose 0.3 percent in June, compared with a revised 0.5 percent gain in May. The data fell short of expectations as economists expected a 0.5 percent gain. .
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Kevin Grady, president of Phoenix Futures and Options, expects gold prices to test the top of the current range in reaction to economic data. Despite the bearish bias, any signs of weakness could support gold prices, he said.
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In a recent report, the US Department of Labor said that the economy created 209,000 jobs in June. This is the first time the employment data has failed to meet expectations since May 2022.
