Gold price above $ 1,940 as inflation beats expectations in July

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(Kitco News) Gold was back to flat trading on the day and above $ 1,940 an ounce to July inflation data, which exceeded market expectations.

The U.S. Consumer Price Index rose 0.6% in July after rising 0.6% in June, the U.S. Labor Department said on Tuesday. Consensus forecasts called for an increase of 0.3%.

Annual inflation also came above expectations in July – at 1% after a June increase of 0.6%.

Monthly core inflation, which erodes volatile food and energy costs, also plummeted on the whole, reaching 0.6% in July, marking the largest monthly price increase in almost 30 years. Annual inflation on an annual basis was 1.6%, which also beat expectations.

The energy index was up 2.5% in July, with the gasoline index up 5.6%, the report said.

“The petrol index continued to rise in July after a sharp increase in June and accounted for about a quarter of the monthly increase in the seasonally adjusted all index of items … This was partly offset by the food index. , which fell 0.4 percent in July, with the index for food at home declining by 1.1 percent, ”the report said.

Economists were not too impressed with the data of inflation, despite the figures beating market expectations for the month.

“Although much stronger than expected, that is still well below the readings seen prior to the pandemic. As the recovery in the US appeared to have stalled along with the resurgence of the virus in August, the upward pressure on prices could have been a bit limited on the month, ‘wrote CIBC Capital Markets economist Katherine Judge.

In an immediate response to the data, gold prices rose, attempting to rebound by going to a major correction on Tuesday. December Comex gold was last traded at $ 1,946.70, up 0.02% on the day.

Golden Bulls are working Wednesday to stabilize markets after prices tumbled more than $ 100 in one day and fell below $ 1,900 on Tuesday amid risk-on sentiment and profit-taking.