(Kitco News) – The gold market is holding steady, testing resistance just below $1,800 an ounce as the inflation pressures cool slightly in July.
Friday, U.S. Department of Commerce said that its Core Personal Expenditure Consumption Index (PCE) increased 0.3% in July, compared to June’s 0.5% increase 04%. The data was in in line with consensus expectations.
For the year, annual inflation held steady at 3.6%, the report said.
The latest inflation data is not having much impact on gold. December gold futures last traded at $1,797.70 an ounce, up 0.14% on the day.
The in-line inflation data comes as the report highlighted weaker consumption data among U.S. consumers even as income rose significantly last month.
The report said that personal spending increased 0.3% in July, compared to a 1.1% increase reported in June. Meanwhile personal income increased 1.1% last month, up from June’s increase of 0.2%.
Economists noted that the strong increase in personal income was in part to do further government stimulus measures.
“Government social benefits increased in July, reflecting new advance Child Tax Credit payments authorized by the American Rescue Plan,” the report said.
The disappointing consumption data comes as the U.S. continues to feel the effects of the COVID-19 pandemic with the rise in Delta variant cases.
While at first blush the latest inflation data appears to be negative for gold, some market analysts have said the Fed doesn’t have to react to an overheating economy and have room to maintain their ultra-accommodative monetary policies. The analysts added that this scenario would provide long-term support for gold.
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