US inflation data better than expected
According to Kitco - data released by the US Commerce Department on Friday showed that the core personal consumption expenditures (PCE) price index, which excludes volatile food and energy prices, rose slightly by 0.1% in August, lower than the expected increase of 0.2%.
The Federal Reserve's preferred inflation measure rose 2.7% last month after three straight months of 2.6%. Annual core PCE inflation was in line with expectations, with economists forecasting a 2.7% increase. On the year, inflation rose 2.3%, down from 2.5% in July.
Along with relatively low inflation, the latest economic report also shows that US consumer income and spending growth are slowing...
The report showed that personal income rose 0.2% in August, down from 0.3% in July. The data was lower than expected, as the consensus forecast had predicted a 0.4% increase.
Consumer spending was also more restrained as personal consumption expenditures rose 0.2% last month, significantly slower than July's 0.5% and also below expectations of 0.3%.
Major overseas markets today saw the US dollar index slightly decline. Recorded at 0:35 on September 28 (Vietnam time), the US Dollar Index, which measures the greenback's fluctuations against 6 major currencies, was at 100.169 points (down 0.08%).
Nymex crude oil prices were mostly steady, trading around $67.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note is falling, currently at 3.77%.
Is the decline in gold a cause for concern?
Despite the decline in world gold prices, experts are still quite positive about the prospects in the coming time. The Global Market and Economic Research Department, UOB Bank (Singapore) has just released the latest report on the outlook for world gold prices.
In the report, experts predict that gold prices will reach 2,700 USD/ounce in the fourth quarter of 2024, 2,800 USD/ounce in the first quarter of 2025, 2,900 USD/ounce in the second quarter of 2025 and finally 3,000 USD/ounce in the third quarter of 2025.
According to UOB, the main driver of gold's rise is the US Federal Reserve's decision to cut interest rates, which will weaken the USD. The group of experts predicts that the Fed's interest rate reduction cycles will last until the first quarter of 2026, bringing the Fed funds rate from the current 5% to 3.25%.
On CBS News, Angelica Leicht — senior editor of Managing Your Money, former editor at The Simple Dollar, Interest, HousingWire and other financial publications — outlines some of the reasons why gold could be a wise addition to your portfolio, even at current high prices.
According to this expert, some reasons to invest in gold include central banks buying; there is still economic uncertainty; gold is a finite resource and demand for technology is increasing. The use of gold in technological applications is also creating a new source of demand.
In particular, the electronics industry continues to find innovative uses for gold in the production of smartphones, computers and other high-tech devices.
Despite the many supportive drivers, there are still risks to gold prices. UOB points out that the main risk is the possibility of an unexpected acceleration in inflation, forcing the Fed to scale back its expected rate cuts.
This could lead to a resurgence in the US dollar and interest rates, which would be detrimental to gold prices. However, since late 2023, gold has proven resilient to the US dollar’s rally. In addition, despite its strong year-to-date gains, UOB believes that gold could still face short-term price corrections.
