Gold Prices Holding Gains Following 0.3% Rise In U.S. PPI
(Kitco News)- Thegold market is holding its own as U.S. wholesale inflation pressures rose morethan expected last month.
Tuesday,the U.S. Labor Department said its Producer Price Index (PPI) rose 0.3% inMarch following an increase of 0.2% in February. According to consensus forecasts, economists were expecting anincrease of 0.1%.
Forthe year, producer prices rose 3.0%.
CorePPI, which strips out volatile food and energy costs, also rose 0.3% lastmonth, following a 0.2% increase in February. Annualcore inflation rose 2.7%.
Goldprices were in positive territory ahead of the report and have added to those gains ininitial reaction. June gold futures last traded at $1,341.70 an ounce, up onthe day 0.12% on the day.
Marketparticipants pay close attention to the PPI as a gauge for inflation at thewholesale level. PPI is seen as a leading indicator because traditionally,producers pass on higher prices to their customers.
Accordingto some economists, the rise in producer prices is a sign that inflation isfinally starting to heat up, which could force the U.S. central bank to raiseinterest more aggressively this year.
However,markets will have to until Wednesday to see if companies are passing on higherprices to their consumers. Currently markets are expecting to see no change inMarch's Consumer Price Index.
By Kitco NewsFor Kitco News
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