U.S PPI Remained Flat in March– April Report

According to the recent producer price index report, which came out today, the PPI for finished goods remained unchanged in March compared with February’s index.

This report serves as an indicator for the path of the U.S core CPI to be published tomorrow, April 13th. On an annual scale, the PPI increased by 2.8% during the last 12 months

During March the food index edged up by 0.2%, while the energy index declined by 1.0%.

The Producer Price index excluding food and energy rose by 0.3% during March 2012.

This PPI ex food and energy is estimated to have a lagged negative linear correlation with gold price; i.e. as the PPI decreases, gold price tends to rise the following day. Furthermore, the PPI excluding food and energy tends to have a positive linear correlation with silver price. These relations are mainly via the movements in U.S dollar.  If this relation will hold up in this month’s publication, the news of the U.S PPI ex food and energy slightly rising may positively affect the direction of silver price during tomorrow’s trading (assuming all things being equal).

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