Gold (NYSE: GLD) futures are seeing increased strength during Wednesday's trading session after the Producer Price Index showed inflation decreased more than expected.
The precious metal spike could be attributed to recent fears of run away inflation set forth by global policies of bailouts and cheap money. The Producer Price Index tracks the change in the selling price of goods and services sold by manufacturers. It is a leading indicator of consumer price inflation, because producers tend to relay higher costs to consumers through higher prices.
However, since the readings today show that inflation remains in-check, decreasing in some aspects, so it calms the fears of run-away inflation and increases the likelihood of future quantitative easing. QE lessens the purchasing power of the country's currency, as usually more of the currency is printed out of thin air. For example, if further QE programs are released in the United States, the US dollar should decrease and in-turn gold should see strength.
Currently, gold futures are trading up 0.5 percent at $1622 per ounce.
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