According to the recent producer price index report, which came out today, the PPI for finished goods sharply increased by 0.4% February compared with January.
This report serves as an indicator for the direction of the U.S core CPI to be published tomorrow, March 16th. On an annual scale, the PPI increased by 3.3% during the past 12 months
During February the food index edged down by 0.1%, while the energy index soared by 1.3%.
The Producer Price index excluding food and energy rose by 0.2% during January 2011.
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 decline 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 shifts in U.S dollar. If this relation will hold up in this month’s publication, the news of the U.S PPI increasing may adversely affect the direction of gold price and positively affect the path of silver price.
Current gold price, short term futures (April 2012 delivery) is traded at $1,647.8 per t oz. a $4.9 increase as of 16:04*.
Current silver price, short term futures (April 2012 delivery) is traded at $32.3 per t oz. a $0.119 increase as of 16:04*.
Euros to US dollar exchange rate is currently traded up at 1.3070 a 0.28% increase as of 16:16*.
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