Gold price at daily highs following 0.2% decrease in U.S. PPI
(Kitco News) Gold prices are at daily highs as the U.S. Producer Price Index (PPI) falls short of expectations in June, declining 0.2%.
Market’s consensus was expecting to see a rise of at least 0.4% on a monthly basis.
The annual PPI also disappointed market forecasts, falling 0.8% vs the expected 0.2% drop in June, the U.S. Labor Department said on Friday.
Core inflation, which strips out volatile food and energy prices was down 0.3% in June amid lackluster demand due to the COVID-19 pandemic. Annual core inflation accelerated just 0.1% versus the expected 0.4% following May’s 0.3% increase.
Gold prices edged up to daily highs in response to the data with August Comex gold futures last trading at $1,815.50, up 0.65% 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.