Gold unmoved by this morning’s inflation data. Inflation, as measured by the Fed’s preferred PCE price index, rose 0.2% in July. While this new number nudged the yearly rate up to 1.4% from 1.3%, Fed watchers feel inflation remained low enough to give the Federal Reserve room to cut rates in September.
In other economic data released this morning, Consumer spending jumped 0.6% last month, while U.S. incomes rose just 0.1%, the smallest gain in nearly a year. Americans had to dip into their savings to cover their expenses.
Earlier today, gold declined amid indications that the U.S. and China may resume talks to resolve their trade dispute.
U.S. President Donald Trump said that the U.S. and China would have a conversation about trade on Thursday, though details weren’t forthcoming. His comments followed indications from China that it won’t immediately retaliate against the latest U.S. tariff increase.
Gold has risen almost 7% so far this month as investors sought a safe haven amid uncertainty over the U.S.-China trade war, fears of an economic recession, speculation of upcoming interest-rate cuts and negative bond yields. Front-month December futures settled at $1,536.90 an ounce Thursday on Comex and were little changed in the first four days of the week. Currently, the December contracts are holding steady at $1,536.90.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 880.36 metric tons Thursday from Wednesday, Reuters reported.
The same factors pushed up silver, which is up almost 11% so far this month, outpacing gold. The September contract settled at $18.167 an ounce Thursday, up 4.3% in the first four days of the week. The December contract, which is becoming the front month, settled at $18.323.
Economic reports Thursday showed second-quarter gross domestic product decelerated more than initially reported and more Americans filed applications for unemployment claims last week. Inflation-adjusted GDP grew at a 2% annualized rate, compared with an initially reported 2.1%, Commerce Department data showed Thursday. Applications for unemployment benefits reached 215,000 in Thursday’s Labor Department report, up from 211,000 the prior week.
First-of-the-month manufacturing data from China, due out this weekend, will shed some light on the impact of the trade war with the U.S. Manufacturing numbers from the U.S. and Europe will come out early next week. U.S. financial markets will be closed Monday for the Labor Day holiday.
Investors also continue to watch for signals that central banks plan further monetary easing. The CME FedWatch Tool put the probability of a 25-basis-point interest-rate cut at the U.S. Federal Reserve’s Sept. 18 meeting at 95.8% early Friday, with 4.2% odds that it won’t act. On Thursday, Christine Lagarde, the likely future president of the European Central Bank, said the ECB still has room to cut rates if needed but it could pose a challenge to financial stability.
Both spot platinum and spot palladium were trading higher early Friday. Platinum advanced 1.7% Thursday and was up 6.9% in the first four days of the week. Spot palladium added 0.1% Thursday and was up 0.9% in the first four days of the w