Metals Stocks: Gold ends higher as key inflation gauge shows signs of cooling

The U.S. inflation rate, as measured by the personal-consumption expenditures index, rose just 0.2% in April for its smallest monthly increase in a year and a half, due largely to a decline in gas prices. While gas prices subsequently rebounded, there were other hints that a surge in inflation might be abating.

The rate of core PCE inflation in the past year, the Fed’s preferred measure, slowed over the past year to 4.9% from 5.2%, in a second straight monthly decline. The last time the core rate saw back-to-back declines was in the first few months of the pandemic in early 2020.

U.S. stocks are headed for weekly gains, amid some relief from the release of minutes from the Federal Reserve’s early May meeting. The Fed reinforced expectations of summertime half-point interest rate increases to battle inflation, but also indicated it will remain flexible after that to reassess the economy.

The minutes didn’t really reveal much new and gold’s sideways action this week, against more solid gains for other assets, shows demand for it lacking right now, Daniel Briesemann, research analyst at Commerzbank, told clients in a note.

“The past two days saw outflows from the gold ETFs again, meaning that gold is lacking any impetus from financial investors,” he said.

Gold’s gain Friday came amid a slightly softer tone to the dollar DXY, -0.08%.

“Gold remains bid above the 200-dma [daily moving average] ($1842 per ounce), but the upside momentum is fading as the improving risk appetite moves capital toward riskier, and better yielding assets,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients.

Among other metals, platinum  PLN22, +0.51% rose 0.6% to close at $943 an ounce, while palladium  PAU22, +2.64% jumped 2.9% to $2,054.80 an ounce.

Copper  HG00, +1.22%  prices gained 1.1% to finish at $4.3065 a pound.