(Kitco News) - The gold market remains stuck and faces further downside pressure because of rising inflation fears after producer prices rose substantially more than expected in April.
The U.S. Labor Department said Wednesday that the headline Producer Price Index jumped 1.4% in April, following March’s increase of 0.7%. The latest inflation data came in significantly hotter than expected, as economists forecasted a 0.5% rise.
On an annual basis, headline wholesale inflation increased 6.0% over the last 12 months, the report said. That marks the largest 12-month advance since December 2022, when prices rose 6.4%.
In a similar trend to consumer prices, higher producer costs are becoming embedded in the broader economy. Core PPI, which excludes volatile food and energy prices, rose 1.0% last month. Core producer inflation also came in well above expectations, as consensus forecasts had called for a 0.3% rise.
For the year, core inflation rose 4.4%, its largest 12-month increase since it jumped 4.5% in February 2023.
PPI is considered a leading inflation indicator because producers often pass higher input costs on to consumers.
Although the gold market is not seeing any significant movement in its initial reaction to the rising inflation numbers, prices have fallen to session lows. Spot gold last traded at $4,679.50, down 0.75% on the day.
