PPI Heats Up, Gold Continues Decline
Gold prices weakened again on Wednesday (May 13) after strong US wholesale inflation data prompted the market to reassess the Fed's stance that interest rates will remain high for longer. Rising Treasury yields also weighed on the precious metal, as gold offers no yield.
The US producer price index (PPI) rose 6% year-on-year, beating all estimates in a Bloomberg survey of economists. The monthly increase was also the sharpest since 2022, while the core PPI (excluding food and energy) rose 5.2% year-on-year, the largest pace in more than three years.
The market reaction was evident in the 10-year Treasury yield, which rose to its highest level since July, fueling increased bets on a more hawkish Fed policy stance. At the same time, gold remained in a tight range after a sharp decline at the start of the Iran war, as markets alternated between the risks of inflation, which curbed the chances of easing, and the risks to growth if the conflict prolongs.
On the physical demand side, India raised import tariffs on gold and silver to around 15% from 6%, a move attributed to efforts to contain currency pressures and bolster foreign exchange reserves. In other metals markets, silver continued to strengthen, supported by buying in China, according to TD Securities, amid persistently high domestic premiums.
At 4:09 p.m. New York time, spot gold fell 0.6% to US$4,689.09 per ounce. Silver rose 1.4% to US$87.64 per ounce (up 19% over May), while platinum and palladium also strengthened, and the Bloomberg Dollar Spot Index remained relatively stable. The market's next focus will be on the direction of yields, the Fed's policy signals following the PPI data, and whether cost pressures (energy and logistics) carry over into consumer inflation. (arl)*
Source: Newsmaker.id
