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Gold at daily highs as U.S. PPI beats expectations in October

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Gold at daily highs as U.S. PPI beats expectations in October

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(Kitco News) Gold prices were trading steady in the green after producer inflation pressure in the U.S. came in above expectations in October.

Producer Price Index (PPI) rose 0.4% in October following a drop of 0.3% in September, the U.S. Labor Department said on Thursday. According to consensus forecasts, economists were expecting an increase of 0.3%.

The annual PPI also beat market forecasts, advancing 1.1% in October after rising 1.4% the month before.

Core inflation, which strips out volatile food and energy prices was up 0.3% in October. Annual core inflation came in at 1.6% versus the expected 1.5% following September’s 2.0% increase.

Gold was largely unchanged in response to the data and trading near daily highs with December Comex gold futures last at $1,470.10 an ounce, up 0.46% 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 Federal Reserve is also constantly keeping a close eye on inflation pressures, especially when making its decision on future rate moves.

Back in October, Fed Chair Powell stated that that current state of policy is “likely to remain appropriate” unless there is “a material re-assessment” of Fed’s outlook, singling a pause in the future. He also said that the Fed will not be ready to raise rates either anytime soon unless there’s “a significant move up in inflation.”

Live 24 hours gold chart [Kitco Inc.]

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