U.S. producer price growth rises to 8.6%, gold price near daily highs

(Kitco News) Gold was largely unchanged and trading near daily highs after the U.S. Producer Price Index (PPI) rose to 8.6% on an annual basis in September versus the expected 8.7%.

This marked the largest year-over-year advance since November 2010.

The PPI slowed to 0.5% on a monthly basis in September from August's 0.7%. Core PPI, which strips out volatile food and energy prices, came in at 0.2% month-on-month after August's advance of 0.6%. And the annual core PPI rose 6.8% versus the expected 7.1%.

Market participants pay close attention to the PPI as a gauge for inflation at the wholesale level. It is seen as a leading indicator because, traditionally, producers pass on higher prices to their customers.

The Federal Reserve also keeps a close eye on inflation pressures as they try to gauge whether inflation will be transitory or not.

Gold ticked down but was largely unchanged following the data release, with prices trading near daily highs and just below the $1,800 an ounce level. At the time of writing, December Comex gold futures were trading at $1,799.80, up 0.28% on the day.

The latest U.S. PPI numbers come one day after September's inflation numbers showed price pressures accelerating to 5.4% annually, which matched the largest annual price gain since 2008.

With inflation concerns rising again in light of the looming energy crisis, Federal Reserve's September meeting minutes showed that the central bank officials are starting to debate whether or not price pressures are as transitory as previously thought.

"Various participants stressed that economic conditions were likely to justify keeping the rate at or near its lower bound over the next couple of years ... In contrast, a number of participants raised the possibility of beginning to increase the target range by the end of next year because they expected that the labor market and inflation outcomes specified in the Committee's guidance on the federal funds rate might be achieved by that time; some of these participants saw inflation as likely to remain elevated in 2022 with risks to the upside," the minutes said.

By Anna Golubova

For Kitco News

Follow annagolubovaagolubova@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Monetary-driven precious metals outperform major base metals

Gold stocks hit by plunging equities markets

Gold stocks down as metal and equities momentum fades

Another Kazatomprom guidance announcement shakes uranium price

Major monetary drivers still supporting gold