(Kitco News ) - The gold market continues to search for solid footing and could attract some bargain hunting as wholesale inflation pressures drop sharply, giving the Federal Reserve more room to cut interest rates this year, according to some economists.
The headline Producer Price Index (PPI) fell 0.5% in April, following a 0.4% decline in March, the U.S. Labor Department announced on Thursday. The latest inflation data was significantly cooler than expected, as the consensus forecast had called for a 0.2% increase.
Over the past 12 months, headline wholesale inflation rose 2.4%, the report said. Annual inflation was also weaker than expected, as economists had anticipated a 2.5% increase.
Excluding volatile food and energy prices, core PPI dropped 0.4% in April, following a 0.1% decline in March. According to consensus estimates, economists had forecast a 0.1% increase.
Gold prices have rebounded strongly from overnight lows, and some analysts believe the weak inflation numbers could provide further momentum for the precious metal. Spot gold last traded at $3,182 an ounce, up 0.19% on the day.
The latest economic data offers some good news for consumers. PPI is considered a leading inflation indicator, as producers typically pass higher input costs on to customers.
