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Gold Prices Shrug Off Strong Rise In Producer Inflation

Kitco News

(Kitco News) - Gold prices remain under pressure, and are seeing little reaction as pipeline inflation pressure heated up last month.

Wednesday, the U.S. Labor Department said its Producer Price Index (PPI) rose 0.5% in May following an increase of 0.1% in April; the data was stronger than expected with economists calling for an increase of 0.3%.

For the year, headline inflation rose 31.% last month, the largest increase since January 2012, the report said.

Core PPI, which strips out volatile food and energy costs, also rose more than expected with a 0.3% reading in the last month, following a 0.2% increase in April. Economists were expecting to see an increase of 0.2%.

Gold prices have been under pressure through most of the early part of the session as the market continues to ignore economic data and instead are focused on the Federal Reserve monetary policy decision. August gold futures last traded at $1,298.30 an ounce, down 0.8% 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.

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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