(Kitco News) - The gold market is trying to attract some bullish momentum as it tests initial resistance at $3,900 an ounce, but analysts warn investors that the precious metal could continue to struggle as inflationary pressures remain a threat to the economy.
Analysts note that elevated producer prices continue to signal that inflation will remain persistently high for the foreseeable future.
The U.S. headline Producer Price Index (PPI) increased 0.3% in October, following September’s revised 1.4% increase, the U.S. Labor Department announced Friday. The latest headline data was slightly cooler than expected, as economists had forecast a 0.4% increase.
However, annual inflation continues to climb. The report said that producer prices increased 6.5% over the last 12 months, the largest annual rise since the 7.4% increase recorded in November 2022.
Higher prices are also becoming more deeply embedded in the broader economy. Core PPI, which strips out volatile food and energy prices, increased 0.3%, following September’s revised 0.8% increase. Core inflation rose in line with consensus forecasts.
Core producer prices have risen 4.9% over the last 12 months.
The gold market caught a modest bid in its initial reaction to the latest inflation data; however, the precious metal is now testing initial resistance. Spot gold last traded at $3,897.90 an ounce, up 0.57% on the day.
