Gold Near Daily Lows As PPI Meets Expectations But Core PPI Disappoints In July
(Kitco News) - Gold prices were trading near daily lows after producer inflation pressure in the U.S. came in as expected in July.
Producer Price Index (PPI) rose 0.2% in July following an advance of 0.1% in June, the U.S. Labor Department said on Friday. According to consensus forecasts, economists were expecting an increase of 0.2%.
The annual PPI also came in as expected, advancing 1.7% in July after the same increase the month before.
Core inflation, which strips out volatile food and energy prices was down 0.1% in July, marking the first decrease since October 2015. Annual core inflation came in at 1.7% versus the expected 2.4% following June’s 2.1% increase.
Gold was largely unchanged in response to the data, edging up slightly but still remaining near daily lows with December Comex gold futures last trading at $1,510.10 an ounce, up 0.04% on the day.
Market participants pay close attention to the PPI as a gauge for inflation at the wholesale level. It is seen as a leading indicator because traditionally producers pass on higher prices to their customers.
The Fed is also constantly keeping a close eye on inflation pressures, especially when making its decision on future rate moves.
Earlier in the session, gold prices rose on risk-off sentiment with gold bulls remaining in control.
“Gold prices are higher in early U.S. trading Friday, as traders and investors are uneasy again, and looking to the safe-haven metals for cover … Technically, the gold bulls have the solid overall near-term technical advantage. A 10-week-old uptrend is in place on the daily bar chart,” said Kitco’s senior technical analyst Jim Wyckoff.