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Gold prices fall after the publication of CPI data warmer than expected in June

(Kitco News) – Gold is under some pressure to sell, but prices continue to remain above $ 1,400 after inflation was slightly warmer than expected last month; However, some analysts have said that inflation data is not enough to change current expectations for rate cuts until the end of the month.

Thursday, the US Department of Labor announced that its consumer price index in the US had increased 0.1% in June, after rising 0.1% in May. The data slightly exceeded expectations. Consensus forecasts called for unchanged reading.

For the year, headline inflation increased by 1.6%, the report says.

By eliminating food and energy price volatility, core inflation has finally exceeded expectations, rising by 0.3% last month, following a 0.1% rise in May. This was the first time in five months that the core CPI was above 0.1%. Economists were expecting an increase of 0.2%. Annual core inflation edged down, up 2.1% in May from 2.0% in May.

The price of gold has risen slightly, as markets continue to digest the comments of Federal Reserve Chairman Jerome Powell, who, in his semiannual testimony to Congress, pointed to the growing uncertainty weighing on US economic growth. The latest gold futures in August traded at $ 1,414.40 an ounce, up 0.14% on the day.

While rent and clothing costs have risen, the report continues to highlight low energy prices. The energy index fell 2.3% last month, while all components of the index, including gasoline prices, fell. For the year, the energy index is down 3.4%.

While Core CPI inflation is above the Federal Reserve's 2% target, Avery Shenfeld, Senior Economist at CIBC Capital Markets, says Core PCE, the measure of preferred inflation by the Federal Reserve, remains below its target.

He added that the latest data would not do much to change the perception of a rate cut by the end of the month.

"Powell's pretty clear penchant for lowering rates now (based on yesterday's testimony) still marks a quarter-point cut this month, with the firmer core reading." today, one more reason why a 50 basis point cut in July is much more unlikely, "he said. "While the Fed has raised the risks of a more persistent decline in its inflation target, it believes that these risks are related to the fear that growth will slow down hard and it is not based as much on the gap existing between inflation and the goal of 2%. "

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