Inflation hits 8.6% in May: live CPI updates

Gold prices rose Friday morning as May inflation data showed prices hit new highs in four decades.

The most actively traded gold futures, which were down 1% before the Labor Department’s morning announcement, recently rose 0.4% to $1,859.50 per troy ounce.

10-year Treasury yields recently traded at 3.137%, down from 3.041% on Thursday. Higher yields on government bonds can make gold, which does not pay investors a fixed income for simply owning the yellow metal, less attractive to hold.

Analysts and investors say the prolonged surge in inflation could prompt the Federal Reserve to tighten monetary policy more aggressively at its meeting next week. However, some investors believe that even if the Fed were to raise rates aggressively, it will struggle to bring down stubborn inflation. That could help gold’s gains, which have outperformed stocks and bonds this year.

“The Fed will try to get inflation under control, but even with higher rates it will be difficult,” said Juan Carlos Artigas, global head of research at the World Gold Council.

Gold prices hit near-record highs this year after Russia invaded Ukraine. Prices have since fallen, with investor sentiment souring as the war drags on and the Fed looks back on its interest rate hike campaign.

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