AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

3/14/2024: Gold slides on strong PPI

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 0.6% to close at $2,167.50 after a strong PPI clouded the prospect for rate cuts from the Fed, boosting yields and the dollar while pressuring alternative assets. It was the second retreat in three sessions for the gold price following eight straight days of gains. Silver dipped 0.4% to $24.87 an ounce.

The producer price index rose 0.8% in February, beating forecasts, to lift the annual wholesale inflation rate to 1.6% from 1% in January. The core PPI, less food and energy, rose a more modest 0.4%.

Following an elevated CPI earlier in the week, the new PPI data show inflation trending in the wrong direction, something the Fed may note when it meets next week on monetary policy, perhaps revising its dot-plot forecast of rate cuts for this year.

Fed fund futures traders have decreased their bets on a quarter-point cut in June to 60%, from around 70% before this week’s inflation reports.

Mixed data added to the rate uncertainty. First-time jobless claims fell 1,000 to 209,000 last week, signaling ongoing strength in the labor market. But retail sales rebounded less than expected in February, and were revised lower in December and January, suggesting a slowdown in consumer spending, the primary driver of GDP.

Benchmark 10-year Treasury yields rose to a one-week high above 4.2% after the PPI release, weighing on gold by increasing the opportunity cost for holding it instead of bonds for safety.

Tracking higher with yields, the dollar rose 0.5% against major rivals. A stronger dollar is a headwind for gold and other commodities because it makes them more expensive in other currencies, limiting demand overseas.

Platinum dropped 1% while palladium rose 0.7%.

At the New York spot close: gold slid $13.30 to $2,167.50; silver dropped 9 cents to $24.87; platinum shed $9.20 to $935.70; and p0alladium picked up $7.60 to $1,078.60 an ounce.