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(Kitco News) – Gold prices are at the peak of their recent trading range, but are still struggling to find momentum, even though consumer inflation is weaker than expected.
Friday, the US Department of Labor announced that its US consumer price index rose 0.3% in April, after rising 0.4% in March. Data was weaker than expected, with consensus forecasts for a 0.4% increase. For the year, inflationary pressures increased by 2%.
Excluding volatile food and energy prices, core inflation rose slightly less than expected, rising 0.1% in April. Economists were expecting an increase of 0.2%. For the year, core inflationary pressures remain moderate, increasing by 2.1%, slightly up from 2.0%
The price of gold rose slightly in initial reaction to disappointing data from inflation, but failed to break the initial resistance at $ 1,290 an ounce. The latest June gold futures contract was $ 1,288.10 per ounce, up 0.23% on the day.
Some commodity analysts have noted that the price of gold should behave well in a context of low inflation as it will prevent the Federal Reserve from aggressively increasing interest rates.
Gasoline prices continued to be a major factor in the data on overall inflation. The report indicates that the gasoline index rose 5.7% last month, "accounting for more than two-thirds of the seasonally adjusted monthly increase."
Overall, the energy index rose 2.9% last month. With regard to food prices, the report states that food costs fell in April. This is the first decline since June 2017.
Avery Shenfeld, senior economist at CIBC Capital Markets, said the lack of inflation could prompt comment from some of the Federal Reserve's dovish members; However, he added that it was unlikely that the data would change the current neutral direction of monetary policy.
"The majority of the Fed will remain, in our opinion, still satisfied with a dominant position, focused on growth and tightening of the labor market as a reason to expect a further rise in the number of employees. inflation, "he said. "Little market reaction likely to give rise to a small error compared to expectations."
Warning: The opinions expressed in this article are those of the author and may not reflect those of the author. Kitco Metals Inc. The author has endeavored to ensure the accuracy of the information provided. However, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. It is not a solicitation to exchange products, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept any liability for losses and / or damages resulting from the use of this publication.
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