(Kitco News) - The gold market is approaching its earlier lows after the latest data shows U.S. producers saw mixed price pressures last month.
The headline Producer Price Index (PPI) rose 1.1% in May, following April’s downwardly revised 1.1% rise, the U.S. Labor Department announced on Thursday. The latest inflation data was higher than expectations, as economists looked for a 0.7% increase.
In the last 12 months, headline wholesale inflation increased 6.5%, the report said, above the consensus for 6.4% and April’s downwardly revised 5.7% reading.
Core PPI, which strips out volatile food and energy costs, rose 0.4% in May, below economists’ 0.5% consensus forecast and following April’s unrevised 0.7% reading. Annual core PPI rose 4.9%, against the consensus expectation for a 5.4% reading and April’s downwardly revised 4.9% print.
Gold prices slid lower immediately after the 8:30 am ET data release. Spot gold last traded at $4,062.04 for a loss of 0.24% 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 rising producer price growth, combined with hotter-than-expected CPI inflation, would constrain the Federal Reserve’s ability to deliver further rate cuts, and could even necessitate a rate hike, which would represent a headwind for gold prices.
