(Kitco News) - The gold market is trading higher after the latest data shows U.S. producers saw elevated price pressures last month.
The headline Producer Price Index (PPI) rose 0.4% in January, following December’s unrevised 0.2% reading, the U.S. Labor Department announced on Thursday. The latest inflation data was hotter than expectations, as economists looked for a 0.3% increase.
In the last 12 months, headline wholesale inflation increased 3.5%, the report said, well above the consensus of 3.2% and also higher than December’s unrevised 3.3% reading.
Core PPI, which strips out volatile food and energy costs, rose 0.3% in January, in line with economists’ 0.3% consensus forecast and following December’s upwardly revised 0.4% reading. Annual core PPI was 3.6%, also well above the consensus expectation for a 3.3% reading and December’s 3.5% print.
Gold prices continued to trade near the upper end of their daily range after the 8:30 am EDT data release. Spot gold last traded at $2,914.07 for a gain of 0.35% 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 rising producer prices, combined with hotter-than-expected CPI inflation, would reinforce the Federal Reserve’s view that any further rate cuts need to be pushed back, which would represent a headwind for gold prices.
