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Gold price surges above $2,350 amid hot US PPI, Fed Chair Powell’s hawkish stance

May 14, 2024

NEW YORK (May 14) Gold prices climbed past the $2,359 figure on Tuesday after data released by the US Department of Labor revealed that factory gate inflation rose above estimates, signaling that prices remained elevated. Despite that, US Treasury yields are sliding, a headwind for the Greenback.

Federal Reserve (Fed) Chair Jerome Powell made headlines after the release of the Producer Price Index (PPI). He commented that he expects inflation to continue heading lower but wasn’t as confident about the disinflation outlook as he had previously been. He added that the Gross Domestic Product (GDP) is expected to grow by 2% or better due to the labor market's strength.

The XAU/USD trades at $2,359, up 0.97%. The US Bureau of Labor Statistics (BLS) revealed that prices paid by producers increased above estimates, with just one reading aligning with economists’ consensus. US Treasury yields jumped sharply toward a daily high of 4.534%, before reversing later.

Daily digest market movers: Gold bright amid falling US yields, soft US Dollar

  • Gold prices fell amid lower US Treasury yields and a strong US Dollar. The US 10-year Treasury note yields 4.451% and is down nearly 4 basis points (bps) from its opening level. The US Dollar Index (DXY), which tracks the Greenback's performance against six other currencies, falls 0.20% to 105.00.
  • The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI) increased by 0.5% MoM, surpassing the forecasted 0.3% rise. Similarly, the core PPI, which excludes food and energy prices, also rose by 0.5%, beating the expected 0.2% increase. Both figures were significantly higher than March's decline of 0.1% in both general and underlying inflation, indicating a jump in producer prices.
  • April’s Consumer Price Index (CPI) is projected to remain unchanged compared to March’s reading at 0.4% MoM. The core CPI is expected to resume its lower trend from 0.4% in March to 0.3% MoM.
  • Further data will be featured during the week, led by Retail Sales on May 15, Initial Jobless Claims, and Industrial Production on May 16.
  • The New York Federal Reserve released its monthly Survey of Consumer Expectations on Monday, showing that the year's inflation expectations increased to 3.3% vs. 3% in March. The data came after the University of Michigan Consumer Sentiment poll showed that inflation expectations for a one-year outlook rose from 3.2% to 3.5%.
  • Interest rate cut expectations toward the end of the year remain at 35 basis points (bps), according to data provided by the Chicago Board of Trade (CBOT).


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