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(Kitco News) -
The gold market is seeing some modest selling pressure, with spot gold giving back nearly all its gains on the day after U.S. wholesale price pressures rose more than expected, renewing inflationary concerns.
On Friday, the U.S. Department of Labor said its Producer Price Index (PPI) rose by 0.3% in July following June’s revised flat reading of 0.0%. According to consensus forecasts, the data was higher than expected, with economists looking for an increase of 0.2%
In the last 12 months, wholesale inflation rose 0.8%, the report said, well above June’s revised 0.2% reading and above the consensus forecast of 0.7%.
Meanwhile, stripping out volatile food and energy prices, the data showed that core inflation rose 0.3% last month, also coming in higher than June’s revised -0.1% reading. Consensus forecasts were looking for a 0.2% increase.
The gold market is seeing a modest selloff in reaction to the latest forward-looking inflation numbers, as the previous month’s downward revisions moderate the higher-than-expected readings for July. Spot gold returned to virtually flat on the session, last trading at $1914.49 an ounce, up 0.13% 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.
