Investing.com – Gold prices edged below breakeven on Friday, as weaker-than-expected inflation data did little to ease investor expectations of a year-end rate hike.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose by $2.61, or 0.20%, to $1,290.40 a troy ounce.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month. The commerce department said Friday.
Inflation, however remained subdued, as the core personal consumption expenditures price index slowed to 1.3% in August from 1.4% in July. The core PCE is the Federal Reserve's preferred inflation measure and has a 2 percent target.
The duo of reports failed to diminish expectations that the Fed will hike rates later this year, as expectations for a December remained unchanged at 71% compared to last week.
Gold is sensitive to moves higher in both bond yields and the U.S. dollar – A stronger dollar makes gold more expensive for holders of foreign currency while a rise in U.S. rates, lift the opportunity cost of holding non-yielding assets such as bullion.
The precious metal is expected to come under pressure in the coming months amid growing rate hike expectations and renewed investor hopes for tax reform.
“A more hawkish shift in Fed policy expectations, good economic data, and optimism about tax reform are support the reflation argument, which is bad for gold prices in the months ahead,” said Tyler Richey, co-editor of the Sevens Report.
In other precious metal trade, silver futures fell 0.77% to $16.72 a troy ounce while platinum futures lost 1.03% to $916.05.
Copper traded at $2.96, down 0.91% while natural gas tacked on 0.20% to $3.02.