Gold Prices See Little Movement Following Mixed PPI Inflation Data
(Kitco News)- Gold pricesremain under pressure, and are seeing little reaction to mixed producerinflation pressures.
Wednesday,the U.S. Labor Department said its Producer Price Index (PPI) rose 0.2% inApril following an increase of 0.3% in March; the data was in line with economists'expectations. For the year, annual producer inflation increased 2.6%.
CorePPI, which strips out volatile food and energy costs, rose less than expectedwith a 0.1% reading in the last month, following a 0.4% increase in March. Economistswere expecting to see an increase of 0.2%. For the year, annual core inflation increased 2.5%.
Goldprices have been under pressure through most of the early part of the sessionas the market continues to ignore economic data. Gold prices, according toanalysts are being driven by strong momentum in the U.S. dollar. June goldfutures last traded at $1,312.50 an ounce, relatively flat on the day.
Market participants pay close attention to the PPI data as a gauge for inflation at the wholesale level. The report is seen as a leading indicator because traditionally, producers pass on higher prices to their customers.
Despite the mixed data, Andrew Hunter, U.S. economist at Capital Markets, said that the numbers confirm that inflation pressures are moving higher, which will force the Federal Reserve to raise interest rates three more times this year.
"The details of the report remain consistent with consumer price inflation trending higher, and we continue to expect the Fed to tighten policy more aggressively over the coming quarters," he said.
By Neils ChristensenFor Kitco News
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