(Kitco News) - The gold market is rallying after the latest data shows U.S. producers saw an easing in price pressures last month.
The Producer Price Index (PPI) rose 0.1% in July, following June’s 0.2% increase, the U.S. Labor Department announced on Tuesday. The latest inflation data was in line with expectations, as economists looked for a 0.1% increase.
In the last 12 months, headline wholesale inflation increased 2.2%, the report said, below the consensus of 2.6% and also lower than June’s 2.7% reading.
Core PPI, which strips out volatile food and energy costs, was a flat 0.0% in July, also better than economists’ forecasts for a 0.2% increase and following June’s downwardly revised 0.3% increase. Annual core PPI was 2.4%, well below the consensus expectation for a 3.0% reading and June’s 3.0% print.
Gold prices are rising following the better-than-expected inflation data. Spot gold rose sharply in the moments following the PPI release, last trading at $2,469.16 for a loss of 0.12% on the day.
PPI is viewed as a leading inflation indicator as producers pass higher input costs on to their customers.
Market analysts have said that falling producer prices, combined with improving CPI inflation, could give the Federal Reserve the confidence to begin lowering interest rates in September, which would support gold’s long-term uptrend.
