PCE data shows that U.S. inflation slowed in February, and gold prices opened more than $10 higher to set a new record high

Daocheng Technology Financial News - Monday (April 1) Asian morning trading,Spot goldOpen more than 10.dollar, refreshed the all-time high of $2245.18/oz, due to last Friday (March 29)United StatesPCE data for February showed moderate price increases in the United States, with the cost of services other than housing and energy slowing sharplyFederal ReserveA rate cut is still possible in June, and the gold market was closed last Friday for the Good Friday holiday. On Monday, the gold market digested the impact of the data.

(Daily chart of spot gold)

US inflation slowed in February

The US Department of Commerce's Bureau of Economic Analysis said on Friday that the personal consumption expenditures (PCE) price index rose 0.3% in February from the previous month. Analysts had expected growth of 0.4%. The January data was revised up from a 0.3% increase to a 0.4% increase.

Jeffrey Roach, chief analyst at LPL Financial in North Carolina, said: "Core services inflation is slowing and is likely to continue to do so throughout the year... By the time the Fed meets in June, these data should be compelling enough for them to start normalising rates."

Commodity prices rose 0.5 per cent last month, boosted by a 3.4 per cent jump in the cost of petrol and other energy products.

Prices for recreational goods, vehicles, clothing and footwear also rose strongly, but prices for furniture, household equipment and other durable goods were lower.

The PCE price index rose 2.5% in February from a year earlier, following a 2.4% increase in January.

Inflation remains above the Fed's 2 per cent target, even though price pressures are weakening and growth has slowed compared with the first half of last year.

Federal Reserve Chairperson Jerome Powell said on Friday that February's inflation data was "more in line with what we want to see".

Fed officials last week left the central bank's policy rate unchanged at its current range of 5.25% -5.50%, having raised rates by 525 basis points since March 2022.

Policymakers expect three rate cuts this year. financial marekt expects the first rate cut in june. exceptforeign exchangeOutside of the market, most U.S. financial marekts were closed for the Good Friday holiday. The dollar fell slightly against a basket of currencies on Friday due to the inflation data, providing an opportunity for gold prices to rise on Monday.

Consumer spending rose by the most in more than a year, highlighting economic resilience

The Commerce Department report on Friday also showed that consumer spending rose last month by the most in more than a year, underscoring the resilience of the US economy, which continues to outperform the rest of the world because of continued strength in the labour market despite rising borrowing costs.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.8 percent last month. It was the biggest gain since January 2023, after rising 0.2 percent in January. Inflation-adjusted consumer spending rebounded 0.4 percent, reversing a 0.2 percent decline in January.

Real consumer spending growth suggests consumption may have maintained much of its momentum in the first quarter, prompting the Atlanta Fed to raise its forecast for annualised gross domestic product growth to 2.3 per cent from 2.1 per cent.

Data from the US Bureau of Statistics showed that both wholesale and retail inventories rose rapidly in February, offsetting a 1.5% widening in the goods trade deficit and supporting the growth outlook.

But most of the spending came from savings as income growth slowed to 0.3 per cent from 1.0 per cent in January. Household disposable income, adjusted for inflation and taxes, fell 0.1 per cent. The savings rate fell to 3.6 per cent from 4.1 per cent in January, the lowest since December 2022.

Kathy Bostjancic, chief economist at Nationwide, said "solid spending can be supported as long as job growth remains strong, however, if the labour market weakens, consumers in general are not prepared".

Outlook

The Bureau of Labor Statistics will release its much-anticipated labor market report this Friday.non-agriculturalThe number of people employed (NFP) is expected to increase by 200,000 in March after 275,000 in February. The U.S. unemployment rate is expected to hold steady at 3.9% in March, while monthly wage inflation, as measured by changes in average hourly earnings, is expected to rise from 0.1% to 0.3%.

FXStreet analyst Eren Sengezer pointed out on Friday that although the non-farm payrolls data in February significantly exceeded market expectations, the dollar was still under selling pressure at that time due to the downward revisions of the data in January and last December. If the non-farm payrolls data in March is stronger than expected and there is no significant correction in the past data, then the dollar may outperform its competitors and put knee-jerk pressure on gold. On the other hand, weak non-farm payrolls growth could hurt the dollar. The optimistic non-farm payrolls data was accompanied by a downward revision of the previous value, which did not allow the dollar to profit from the data.

Because Monday coincides with the Easter holiday, financial marekts in most European and American countries are closed, and it is expected that the overall market trading may be subject to certain restrictions.

At 06:29 Beijing time, spot gold is now quoted at 2241.50 US dollars/ounce.