Spot gold rallies above $2,525 per ounce as U.S. PPI is mixed in August

NEW YORK (September 12) The gold market is trading at session highs after the latest data shows U.S. producers saw mixed price pressures last month.

The headline Producer Price Index (PPI) rose 0.2% in August, following July’s 0.1% increase, the U.S. Labor Department announced on Tuesday. The latest inflation data was higher than expectations, as economists looked for a 0.1% increase.

In the last 12 months, headline wholesale inflation increased 1.7%, the report said, below the consensus of 1.8% and July’s downwardly revised 2.1% reading. 

Core PPI, which strips out volatile food and energy costs, rose 0.3% in August, above economists’ forecasts for a 0.2% increase and following July’s downwardly revised -0.2% reading. Annual core PPI was 2.4%, below the consensus expectation for a 2.5% reading and the same as July’s unrevised 2.4% print.

Gold prices are rising following the mixed inflation data. Spot gold rose to session highs in the moments following the PPI release, last trading at $2,525.43 for a gain of 0.54% on the day.

PPI is viewed as a leading inflation indicator as producers pass higher input costs on to their customers.

Market analysts have said that falling producer prices, combined with improving CPI inflation, might give the Federal Reserve the confidence to lower interest rates by more than 25 basis points at their September meeting, which would help support gold’s long-term uptrend.

KitcoNews