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Gold Holding Gains Despite Drop In Producer Inflation Pressures

Kitco News

(Kitco News) - Gold prices remain near their overnight five-month high following data that showed a drop in pipeline inflation pressures last month.

Thursday, the U.S. Labor Department said its Producer Price Index fell 0.1% in March, down from the 0.3% rise seen February. According to consensus forecasts, economists were expecting to see a flat reading in inflation.

The report said that headline inflation rose 2.3% in the last 12 months, “the largest increase since moving up 2.4 percent for the 12 months ended March 2012.”

Core inflation, which strips out volatile food and energy prices was unchanged last month following a 0.2% rise.

Annual core inflation rose 1.6% last month, below economist expectations but higher than last month’s rise of 1.5%.

June gold futures last traded at $1,288.40 an ounce, up 0.81% on the day and was less than four dollars from the session highs.

Market participants monitor the data as a gauge for inflation at the wholesale level. PPI is seen as a leading indicator because traditionally, producers pass on higher prices to their customers. The Consumer Price Index is scheduled for release on Friday, although markets will be closed for the Easter Holiday.

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