(Kitco News) – Gold prices remain under pressure, and are trading at session lows after producer price inflation came in much hotter than expected last month.
Friday, the U.S. Labor Department said its Producer Price Index (PPI) rose 0.6% in October following an increase of 0.2% in September; the data was stronger than expected with economists’ forecasting an increase of 0.2%.
Core PPI, which strips out volatile food and energy costs, also rose more than expected with a 0.5% reading in the last month, following a 0.2% increase in September. Economists were expecting to see an increase of 0.2%.
Gold prices were under pressure ahead of the data and lost further ground following the wholesale inflation data. December gold futures last traded at $1,213.10 an ounce, down nearly 1% on the day.
While inflation numbers are bullish for gold, analysts have said that the precious metal could suffer in the near-term as the data support further interest rate hikes, which is bullish for the U.S. dollar.
Economists pay close attention to producer prices as it is a leading indicator for consumer prices. Companies pass on higher costs to their customers. Economists note that the stronger than expected PPI data raises the upside risk to consumer inflation pressures.
By Neils Christensen
For Kitco News