Gold price continues to drop below $2,000 as U.S. PPI surprises on the upside
(Kitco News) Gold prices continued to fall further below the $2,000 an ounce level as the U.S. Producer Price Index (PPI) beat expectations in July, rising 0.6%. The monthly increase marked the biggest advance in nearly two years.
The market’s consensus was expecting to see a rise of 0.3% on a monthly basis.
Gold prices saw even more losses following the data release after already falling below $2,000 an ounce in overnight trading. December Comex gold futures were last at $1,976.90, down 3.08% on the day.
The annual PPI also beat market forecasts, falling just 0.4% versus the expected 0.7% drop in July.
Core PPI, which strips out volatile food and energy prices was up 0.5% in July. Annual core PPI also rose, increasing 0.3%.
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.