US PCE inflation slows but remains high! Rate hike expectations suppress gold prices, spot gold falls for three consecutive weeks
Spot gold saw a slight rebound on Friday, but remained weak overall for the week, recording a weekly decline, marking the third consecutive week of decline. The latest data shows that while US inflation cooled in May, it remains high. The president of the Federal Reserve Bank of Chicago recently stated that it is too early to discuss whether to raise interest rates in July. However, earlier this week, Fed Chair Powell said that consecutive interest rate hikes were not ruled out. The rising expectation of Fed rate hikes has put pressure on spot gold recently. On Friday, spot gold opened at $1908.25 per ounce, reaching a high of $1922.69 and a low of $1900.72, closing at $1919.54, up 0.59%. On Friday evening, Beijing time, data released by the US Department of Commerce showed that the core personal consumption expenditures (PCE) price index rose 0.3% month-on-month in May, compared to a 0.4% increase in April. The rise in inflation met economists' expectations. Meanwhile, the core inflation rate rose 4.6% year-on-year in May, slightly lower than the 4.7% increase in April. The annual core inflation rate was slightly lower than expected; economists predicted the data would remain unchanged. However, from a broader trend perspective, inflation remains stubbornly high, more than double the Fed's 2% target. The above data is one of the inflation indicators that the Fed relies heavily on. The Fed is now at a crossroads, eager to see signs of cooling inflation. Analysis indicates that overall inflation is falling faster than core prices. The report stated that the PCE price index rose 0.1% month-on-month in May, compared to a 0.4% increase in April. The above data is still not good news for the Fed. Some institutions point out that although the inflation data shows some signs of progress, the inflation rate is still far above the Fed's 2% target. This means that the Fed's tightening policy cannot be easily withdrawn, and a rate hike in July is likely. After the June interest rate meeting, the Fed kept interest rates at 5% to 5.25%, pausing after 10 consecutive rate hikes. But at the same meeting, officials raised their forecasts for the number of tightening moves for the rest of the year, now eyeing two more. Recently, Fed officials have frequently made hawkish remarks. Earlier this week, Fed Chair Powell emphasized that consecutive interest rate hikes were not ruled out. He also stated that there would be no rate cuts this year. On Friday local time, Chicago Fed President Goolsbee said that it was too early to discuss whether policymakers should raise interest rates in July, but also said that inflation remains well above target and more persistent than expected. He noted that while some inflation indicators have improved, others have fallen less than expected. Goolsbee said: "What everyone should be focused on in the near term is: Are goods prices, or inflation, temporarily high—like used cars are particularly expensive, but will come down—or is there something more persistent? That's the key."
Time:
2023-07-03 07:45
First Gold Network July 1st news: Spot gold rebounded slightly on Friday, but remained weak overall this week, recording a weekly decline, marking the third consecutive week of decline for gold prices. The latest data shows that while US inflation in May cooled somewhat, it remains high. The president of the Federal Reserve Bank of Chicago recently stated that it is too early to discuss whether to raise interest rates in July. However, earlier this week, Fed Chair Powell said that consecutive interest rate hikes were not ruled out. The rising expectation of Fed interest rate hikes has put pressure on spot gold prices recently.
On Friday, spot gold opened at $1908.25 per ounce, reached a high of $1922.69 per ounce, a low of $1900.72 per ounce, and closed at $1919.54 per ounce, up 0.59%.
On Friday evening, Beijing time, data released by the US Department of Commerce showed that the core personal consumption expenditures (PCE) price index rose 0.3% month-on-month in May, compared to a 0.4% increase in April. The rise in inflation was in line with economists' expectations.
Meanwhile, the core inflation rate rose 4.6% year-on-year in May, slightly lower than the 4.7% increase in April. The annual core inflation rate was slightly below expectations; economists predicted the data would remain unchanged. However, from a broader trend perspective, inflation remains stubbornly high, more than double the Fed's 2% target.
The above data is one of the inflation indicators that the Fed relies heavily on. The Fed is now at a crossroads, eager to see signs of cooling inflation.
Analysis indicates that the overall inflation rate is falling faster than core prices. The report stated that the PCE price index increased by 0.1% month-on-month in May, compared to a 0.4% increase in April.
The above data is still not good news for the Fed. Some institutions point out that although the inflation data shows some signs of progress, the inflation rate is still far above the Fed's 2% target. This also means that the Fed's tightening policy cannot be easily withdrawn, and interest rate hikes are likely to resume in July.
After the June interest rate meeting, the Fed kept interest rates at 5% to 5.25%, pausing its 10 consecutive interest rate hikes. But at the same meeting, officials raised their forecast for the number of tightening measures for the rest of the year, currently targeting two more increases.
Recently, Fed officials have frequently made hawkish remarks. Earlier this week, Fed Chair Powell also emphasized that consecutive interest rate hikes were not ruled out. He also stated that there would be no rate cuts this year.
On Friday local time, Chicago Federal Reserve Bank President Austan Goolsbee said that it was too early to discuss whether policymakers should raise interest rates in July, but also said that inflation remains well above target and more persistent than expected. He noted that while some inflation indicators have improved, others have fallen less than expected.
Goolsbee said: "What everyone should be focused on in the near term is: Are the prices of goods, or inflation, temporarily high—for example, used cars are particularly expensive but will come down—or is there something more persistent? That's the key."
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