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Gold Prices See Little Movement Following Mixed PPI Inflation Data

Kitco News

(Kitco News) - Gold prices remain under pressure, and are seeing little reaction to mixed producer inflation pressures.

Wednesday, the U.S. Labor Department said its Producer Price Index (PPI) rose 0.2% in April following an increase of 0.3% in March; the data was in line with economists’ expectations. For the year, annual producer inflation increased 2.6%.

Core PPI, which strips out volatile food and energy costs, rose less than expected with a 0.1% reading in the last month, following a 0.4% increase in March. Economists were expecting to see an increase of 0.2%. For the year, annual core inflation increased 2.5%.

Gold prices have been under pressure through most of the early part of the session as the market continues to ignore economic data. Gold prices, according to analysts are being driven by strong momentum in the U.S. dollar. June gold futures last traded at $1,312.50 an ounce, relatively flat on the day.

Market participants pay close attention to the PPI data as a gauge for inflation at the wholesale level. The report is seen as a leading indicator because traditionally, producers pass on higher prices to their customers.

Despite the mixed data, Andrew Hunter, U.S. economist at Capital Markets, said that the numbers confirm that inflation pressures are moving higher, which will force the Federal Reserve to raise interest rates three more times this year.

“The details of the report remain consistent with consumer price inflation trending higher, and we continue to expect the Fed to tighten policy more aggressively over the coming quarters,” he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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