Gold prices in neutral territory eyeing $1,835 following slightly weaker U.S. PPI data
(Kitco News) -The gold market remains in striking distance of a criticalresistance point but is not seeing much traction following slightly weaker thanexpected wholesale inflation pressures.
Tuesday,the U.S. Labor Department said its Producer Price Index (PPI) rose 0.6% in Octoberfollowing September's rise of 0.5%; the data was in line with economists'expectations.
Thereport said that annual inflation rose 8.6%, down slightly from expectations. Consensusforecasts called for 8.7%.
Thegold market is not seeing much reaction to the latest inflation data. December goldfutures last traded at $1828.1 an ounce, flat on the day. For some market analysts, $1,835 is the key level the gold market has to break to attract new bullish momentum.
"Should that break, it would end a long series of lower highs and signal a range break, with little standing in the way of a return to the May high of $1916," said Adam Button, chief currency strategist at Forexlive.com in a research note.
CorePPI, which strips out volatile food and energy costs, rose 0.4% last month,following September's increase of 0.2%. Economists were expecting to see a 0.5%rise.
Economists note that although the headline data was slightly on the soft side, broad inflation pressures could remain elevated for longer than expected. Wednesday markets will recieve further inflation data with the release of U.S. Consumer Price Index.
Economists pay close attention to producer prices as it is a leading indicator for consumer prices. Traditionally, companies pass on higher costs to their customers.
By Neils ChristensenFor Kitco News
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