Investing.com - Gold prices turned around and traded lower after inflation and labor data released on Thursday were stronger than expected, dampening expectations for aggressive policy easing from the Federal Reserve.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, settled down $5.80 to $1,406.70 a troy ounce. That was down from an intraday high of $1,429.40 before the data.
Core consumer prices, that exclude volatile food and energy costs, increased by the most in nearly one-and-a-half years in June, according to data released on Thursday. The unexpected tick higher to 2.1% pushes the reading slightly past the Federal Reserve’s target of 2.0%.
“It would of course be ironic if inflation became interesting just as the Fed was abandoning such concerns,” said Timothy Duy, director of the Oregon Economic Forum.
Federal Reserve Chairman Jerome Powell said in testimony delivered to Congress on Wednesday that he was concerned weak inflation would be more persistent than anticipated, while also raising concerns of economic uncertainty from ongoing trade disputes.
Duy said that Powell “effectively confirmed that the Fed intended to cut rates at the end of this month. The Fed is taking out insurance against increasing downside risks given that the cost of that insurance is cheap given low inflation.”
Powell is currently delivering the same testimony to the Senate Banking Committee on Thursday.
The number of Americans filing applications for unemployment benefits dropped to a three-month low last week.
Weekly jobless claims added to signs of a strong U.S. labor market, after the monthly jobs report scaled back expectations for more aggressive policy easing.
“Financial market uncertainty and accommodative monetary policy will likely support gold investment demand,” the World Gold Council said its mid-year outlook released Thursday.
In other metals trading, silver futures lost 0.3% to $15.188 a troy ounce by 10:43 AM ET (14:43 GMT).
Palladium futures lost 1.9% to $1,558.75 an ounce, while sister metal platinum fell 0.3% to $827.70.
In base metals, copper traded down 0.5% to $2.680 a pound.