PR: Gold holds steady as US dollar falls on inflation data
Gold prices held steady this afternoon after a report from the Department of Labor showed an unexpected decline in wholesale prices, putting pressure on the US dollar, an alternative investment to gold.
The producer price index (PPI) fell 0.1 percent in December, while analysts polled by Bloomberg projected a 0.1 percent gain.
Slowing inflation could prompt the Federal Reserve to open for further quantitative easing to drive up prices and increase spending to stimulate economic activity. Further stimulus moves by the Fed would undermine the greenback and boost gold’s appeal as an inflation hedge.
Earlier this month, president of the Federal Reserve Bank of Atlanta Dennis Lockhart and his counterpart from the New York Fed William Dudley indicated the central bank was open to introducing more stimulus to support the ongoing recovery.
Traders are now looking to tomorrow’s consumer price inflation data for December, which is currently expected to show a marginal increase from the previous month.
Gold traded at US$1,652/oz this afternoon, up just US$1 from yesterday’s close. Silver rose 36 cents to US$30.42/oz and platinum declined US$4 to US$1,515/oz.
