Gold futures closed higher on Friday (May 26) as investors turned to the precious metal amid persistently high US inflation data, seeking it as a hedge against rising prices.
Gold futures recorded a modest gain of 60 cents, or 0.03%, closing at $1,944.30 per ounce. However, the week concluded with a decline of 1.9%, marking the third consecutive weekly decrease. Silver futures, on the other hand, experienced a stronger rally, rising 45 cents, or 1.96%, to settle at $23.36 per ounce. Platinum futures closed at $1,028.10 per ounce, up $1.80, or 0.18%, while palladium futures settled at $1,426.10 per ounce, showing a gain of $7.90, or 0.6%.
The latest US inflation figures released by the Commerce Department influenced investors’ decisions to purchase gold as a means to safeguard against inflation. The headline Personal Consumption Expenditures (PCE) Price Index, which encompasses food and energy costs, rose to 4.4% in April, up from 4.2% in March. On a monthly basis, the headline PCE index increased by 0.4% in April compared to 0.1% in the previous month.
The core PCE index, which excludes volatile food and energy components and is closely monitored by the Federal Reserve, experienced a year-over-year increase of 4.7% in April, surpassing analysts’ expectations and outperforming March’s figure of 4.6%. On a monthly basis, the core PCE rose by 0.4%, exceeding analysts’ projections of 0.3% growth and outpacing March’s 0.3% increase.
The PCE index is considered a comprehensive measure of inflation as it encompasses a wider range of goods and services than the Consumer Price Index (CPI), providing insights into consumer behavior.
Additionally, the Commerce Department reported a 1.1% increase in durable goods orders for April, including items such as aircraft, automobiles, and machinery with a lifespan of three years or more. This exceeded analysts’ expectations following a 3.3% rise in March, with aircraft orders contributing to the growth. However, orders for core capital goods, which exclude aircraft and defense products, declined by 0.6% in April, signaling a dip in business spending plans.
Meanwhile, the University of Michigan released a survey indicating a decline in the US Consumer Confidence Index for May. The index fell to 59.2, reflecting concerns over the expansion of the US debt ceiling. Nevertheless, the figure exceeded analysts’ expectations of 57.7, albeit down from April’s reading of 63.5. Furthermore, consumer expectations for inflation moderated, with an anticipated rate of 4.2% over the next year, compared to 4.6% in the April survey. Expectations for inflation over the next five years remained in the range of 2.9-3.0%.
Investors continue to monitor inflationary trends and seek safe-haven assets like gold to protect their portfolios amid economic uncertainties.
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Saturday, May 27, 2023