According to the recent producer price index monthly report, which was published yesterday, the PPI for finished goods fell again by 0.8% in November compared with October’s index.
This report serves as an indicator for the developments in the U.S CPI to be published later this week. This is the second consecutive month in which the PPI declined. Last month, the PPI declined by 0.2%. On an annual scale, the PPI increased by 1.5% during the past 12 months.
During November, the food index rose by 1.3%; conversely, the energy index declined by 4.6%. Thus, the main reason for the fall in PPI was the plunge in oil price.
On the other hand, the Producer Price index excluding food and energy edged up by 0.1% during November 2012.
This PPI ex food and energy is estimated to have a lagged negative linear correlation with gold price; i.e. as the PPI rise, gold price tends to fall the next day. On the other hand, the PPI excluding food and energy tends to have a positive linear correlation with silver price. These relations are mainly via the changes in U.S dollar. If this relation will remain stable for this month’s publication, this news is likely to have a modest effect on the rates of precious metals.
Currently (as of 20:30 GMT), the prices of gold and silver are slightly rising; the major stock indexes, such as Dow Jones, NASDAQ and S&P500 are edging up; the Euro/USD is modestly decreasing.
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