The producer price index was published today. It showed that the rate of PPI for finished goods didn’t change in August compared to a 0.2% increase (seasonally adjusted) during July.
This report also serves as an indicator to the upcoming core CPI to be published tomorrow in the U.S.
The food index is one of the factors that inclined during August by 1.1%, while the energy index fell by 1.0%. As a result, the PPI inclined by 6.5% during the past 12 months.
The Producer Price index excluding food and energy slightly rose by 0.1% during August.
The last index (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 US dollar changes. If this relation will also hold up this month, this news of the PPI falling might curb some of the increases in gold price and perhaps even cause a short term change in direction. Since this index had a very modest change, it’s not likely to have much of an effect on gold and silver prices.
Current gold price, short term futures (October 2011 delivery) is traded at $1,829.7 per t oz. a $0.400 decrease as of 13:38*.
Current silver price, short term futures (October 2011 delivery) is traded at $41.000 per t oz. a $0.193 decrease as of 13:39*.
Euros to US dollar exchange rate is currently traded up at 1.3740 a 0.4507% increase as of 13:48*.
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