According to Neils Christensen - an analyst at Kitco News, the Core Personal Consumption Expenditures (Core PCE) index - the US Federal Reserve's (FED) preferred inflation measure, excluding volatile food and energy prices - rose 0.2% last month, higher than the 0.1% increase in November. Consumer prices increased in line with analysts' forecasts.
Core inflation rose 2.8% over the past 12 months, unchanged from November's reading, the Commerce Department reported on Friday.
Meanwhile, the headline PCE index rose 0.3% last month and 2.6% year-on-year.
The gold market maintained high prices, continuing to anchor above $2,800/ounce.
Analysts say the latest inflation data paints a mixed picture for gold. High consumer prices will make it difficult for the Federal Reserve to cut interest rates in the near future. However, uncontrolled inflation also poses risks to the economy, thereby reinforcing gold's safe-haven role.
In addition, high inflation and interest rates could increase risks to the already volatile stock market, creating additional momentum to support gold prices.
The report also highlighted strong growth in personal consumption, with personal spending rising 0.7% last month, up from November's 0.4% gain. The data beat economists' expectations, who had forecast a 0.5% gain.
However, consumers remained reliant on debt and savings, as personal income rose just 0.4%, in line with forecasts.
The latest consumer data could reinforce expectations that the Federal Reserve will keep interest rates on hold for the foreseeable future. Fed Chairman Jerome Powell said on Wednesday that the central bank is in no rush to cut rates this year as inflation remains high and the labor market remains strong.
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