Gold recovers after release of disinflationary US “factory gate” price data
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Gold recovers on Thursday after the release of lower-than-expected US factory-gate price inflation data. The precious metal had retreated after the Federal Reserve’s more-sober-than-expected policy assessment. Gold spiked on Wednesday following cooler US inflation data, however, it later pulled back. XAU/USD might have formed a bearish Head-and-Shoulders pattern on the daily chart. Gold (XAU/USD) trades higher and is currently exchanging hands in the $2,320s on Thursday, following some volatile moves. The yellow metal remains broadly stuck in the range between $2,270 and $2,450, the parameters of which were pegged out in April and early May. Gold has recovered following the release of US Producer Price Index (PPI) data for May. The data showed a 0.2% decline in producer prices month-over-month, according to the US Bureau of Labor Statistics. This came after a 0.5% (revised) rise recorded in April, and was below the 0.2% consensus estimate. PPI ex Food and Energy, meanwhile, flatlined in May MoM compared to a 0.5% rise in April, and underhot economists expectations of 0.3%. The year-over-year readings were similarly lower. Headline PPI rose 2.2% YoY in May against 2.3% (revised up) in Apirl and below expectations of 2.5%. PPI ex Food & Energy rose 2.3% compared to 2.4% in the previous month and 2.4% expected. The PPI data, informally known as “factor gate price” inflation, suggests the Federal Reserve (Fed) could move to cut interest rates sooner than previously thought. This is likely to support Gold by reducing the opportunity cost of holding the precious metal, making it more attractive to investors. Gold was also benefited by US jobs data, which showed Initial Jobless Claims for the weak ending June 7, rising to 242K from 229K in the prior week, when 225K had been forecast, according to the US Department of Labor. These further recalibrated near-term interest-rate expectations lower, benefiting Gold. Gold volatile on…
Filed under: News - @ June 13, 2024 10:18 pm