January proved to be a bumpy month for inflation. The Federal Reserve's preferred inflation gauge showed a significant acceleration in month-on-month growth on Thursday, raising concerns that the task of reining in the cost of living may be far from over.
The U.S. core PCE price index in January recorded an annual rate of 2.8%, the smallest increase since March 2021, in line with expectations and down from the previous value of 2.90%; the U.S. core PCE price index in January recorded a monthly rate of 0.4%, a record The largest increase since February 2023, also in line with expectations, the previous value was 0.2%.
After the PCE data was released, spot gold rose by $10 in the short term, hitting the 2040 mark; the U.S. dollar index fell by 15 points in the short term, away from the 104 mark. Spot silver rose by more than $0.2 in the short term.
The most active gold futures contract on COMEX was 3,978 lots traded instantly within one minute from 21:31 to 21:32 Beijing time on February 29, with a total contract value of US$815 million;
The most active gold futures contract on COMEX was 3,182 lots traded within one minute from 21:36 to 21:37 Beijing time on February 29, with a total contract value of US$653 million;
Thursday's PCE data echoed January's CPI index, which also showed a faster pace of rising costs for goods and services. Although the two inflation measures use slightly different calculation methods, both showed that the inflation trend re-accelerated month-on-month in January.
Previously, both the U.S. CPI and PPI rose in January, so the PCE report, which was in line with expectations, relieved traders who had significantly scaled back their bets on interest rate cuts. "The PCE report is better news than the more problematic signal sent by the CPI earlier this month," said Benoit Peloille, chief investment officer at Natixis WM.
Also, it's worth noting that January's statistics tend to be noisier due to annual price changes and minimum wage increases. So while Thursday's report will be critical for Fed officials to assess whether inflation is on track to hit their 2% target, February's data will be even more important.
February's data will help the Fed determine whether last month's rebound in inflation was just a one-off or a worrying trend that could prompt the Fed to delay cutting interest rates or even begin to consider whether another rate hike may be needed.
But apart from inflation, developments on the economic front are also important. A series of recent economic data (retail sales, ISM service PMI, consumer confidence) that have been worse than expected have made people worry that the US economy is losing momentum.
After a strong holiday shopping season, inflation-adjusted consumer spending fell slightly in January. And real disposable income, the main underpinning of spending, was little changed.
Continuously updating...
Article forwarded from: Golden Ten Data