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(Kitco News) - The gold market is seeing some modest selling pressure, trying to hold gains above critical initial resistance at $1,950 an ounce as U.S. wholesale price pressures cools more than expected, further easing inflationary concerns.
Thursday, U.S. Labor Department said its Producer Price Index (PPI) rose by 0.1% last month following May’s revised drop of 0.4%. According to consensus forecasts, the data was cooler than expected, with economists looking for an increase of 0.2%
In the last 12 months, wholesale inflation rose 0.1%, the report said, down compared to May’s increase of 1.1%.
Meanwhile, stripping out volatile food and energy prices, the data showed that core inflation rose 0.1% last month and in line also coming in weaker than expected. Consensus forecasts were looking for a 0.2% increase.
The gold market is not seeing much reaction to the latest forward looking inflation numbers as it sees some profit taking following Wednesday’s breakout. August gold futures last traded at $1,958.10 an ounce, down 0.18% on the day.
Economists pay close attention to producer prices as it is a leading indicator for consumer prices. Traditionally, companies pass on higher costs to their customers. Economists have said that the drop in headline inflation is good news for consumers; however, stubborn core inflation indicates that higher prices are becoming embedded in the broader economy.
