Gold prices see some profit taking as US economy rises 1.5% in Q2, PCE inflation rises 0.2%

(Kitco News) - Relatively steady economic data is prompting some investors to take profits in gold and silver as the Federal Reserve remains on track to raise interest rates to bring inflationary pressures under control. The U.S. Bureau of Economic Analysis (BEA) announced on Wednesday that the preliminary reading of second-quarter Gross Domestic Product (GDP) showed that the economy expanded by 1.5%, unchanged from the revised initial reading and still down from first-quarter growth of 2.1%. The data was in line with economists’ expectations. The initial reading for Q2 growth was revised down from 1.6%. The report also noted that inflation moved sharply higher in the second quarter. The preliminary GDP Price Index rose 6.4% in Q2, up from the initial reading of 6.2%. Economists were expecting an unchanged reading. However, the BEA also released Personal Consumption Expenditures (PCE) data for July, including the core PCE index, which excludes volatile food and energy prices and is the Federal Reserve’s preferred inflation gauge. While economic growth remains sluggish, the monthly inflation data showed that consumer price pressures remained relatively benign last month. The report said that core PCE increased 0.2% in July, up from June’s increase of 0.1%. The increase was in line with consensus estimates. For the year, core inflation rose 3.3%. Headline inflation was also relatively muted, even as energy prices remained elevated. Headline inflation rose 0.2% in July, just slightly hotter than expected. In the last 12 months, headline inflation rose 3.7%. According to consensus forecasts, economists were expecting a 3.6% increase. The gold market has seen renewed selling pressure in its initial reaction to the data; however, it is still holding initial support above $4,600 perd ounce. Spot gold last traded at $4,623.50 an ounce, down 0.75% on the day. Analysts have said they see the move as expected profit-taking, with the latest economic data continuing to support the Federal Reserve's tightening bias. Neils Christensen Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of reporting experience working for news organizations throughout Canada. His experiences include covering territorial and federal politics in Nunavut, Canada. He has worked exclusively within the financial sector since 2007, when he started with the Canadian Economic Press. Neils can be contacted at: 1 866 925 4826 ext. 1526 nchristensen at kitco.com @KitcoNewsNOW Tags: gold gold prices us economy US GDP US PCE inflation inflation interest rates PCE Federal Reserve rate hikes Share Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.