Gold and silver retreated in Friday morning trading after a government report measuring wholesale prices came in hotter than expected.
The Producer Price Index (PPI) – which gauges the prices producers get for their goods and services in the marketplace – rose 0.2% last month, revealing higher than anticipated inflationary pressures. Wall Street analysts had projected a 0.1% increase.
On an unadjusted basis, the index for final demand rose 2.6% over the past year – the largest advance since moving up 2.7% in March 2023, the data show. June’s rise in the index for final demand can be traced to a 0.6% increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.5%.
June’s PPI figures contrasted with Thursday’s better-than-expected Consumer Price Index (CPI) data showing inflation had cooled to 3%, while the core price index, which strips out food and energy because of their sometimes volatile price swings, rose by 3.3% year over year.
After crossing the $2,400 per ounce threshold on Thursday to close the day at $2,415, gold pulled back Friday morning, down $6.97 at $2,408 per ounce. After hitting a six-week high, silver was similarly muted in trading late Friday morning, down $0.46 at $30.95 per ounce.
So far, the conflicting PPI and CPI reports seem to have little bearing, if any, on optimistic traders, who are still betting on the Fed to reduce 23-year-high interest rates soon. In fact, even after Friday’s underwhelming PPI data, the market still estimates a greater than 96% chance that policymakers will adjust rates beginning in September.