The producer price index was published today. It showed a sharp increase in the PPI for finished goods in September compared to August – an increase of 0.8%.
This report also serves as an indicator for the upcoming U.S core consumer price index to be published tomorrow.
The energy index is one of the prime factors that inclined during September by 2.3%, while the food index rose by only 0.6%. As a result, the PPI inclined by 6.9% during the past 12 months.
The Producer Price index excluding food and energy slightly rose by 0.2% during September.
This PPI ex food and energy is estimated to have a lagged negative linear correlation with gold price; i.e. as the PPI rises, gold price tends to fall the following day. Furthermore, the PPI excluding food and energy has a positive linear correlation with silver price. These relations are mainly directed via the U.S dollar changes. If this relation will also hold up this month, this news of the PPI rising might affect gold price to slip and silver price to slightly increase. Currently the gold and silver prices are moving in the predicted direction as indicated below.
Current gold price, short term futures (November 2011 delivery) is traded at $1,657.1 per t oz. a $19.5 decrease as of 19:17*.
Current silver price, short term futures (November 2011 delivery) is traded at $31.925 per t oz. a $0.104 increase as of 19:17*.
Euros to US dollar exchange rate is currently traded up at 1.3742 a 0.0291% increase as of 19:27*.
For more on this subject: