Gold price hits new daily lows as U.S. Producer Price Index eases but at a slower pace in January

(Kitco News) Gold edged down and reached fresh daily lows after the U.S. Producer Price Index (PPI) cooled but at a slower pace last month, coming in at 6% on an annual basis versus the expected 5.4%.

On a monthly basis, the PPI advanced 0.7% in January after December’s drop of 0.2%. Core PPI, which strips out volatile food and energy prices, was up 0.5% month-on-month after December’s advance of 0.3%. And the annual core PPI slowed to 5.4% from December’s 5.8%. Market consensus calls were expecting a slowdown to 4.9% in January.

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 PPI release is also key for the Federal Reserve, which is still debating how many more rate hikes it will need before pausing.

Gold dropped to new daily lows after the PPI numbers were published, with April Comex gold futures last trading at $1,840.80, down 0.24% on the day.