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Peak inflation premature; gold price rising as U.S. PPI hits new record, rising 11.2% annually in March

Peak inflation premature; gold price rising as U.S. PPI hits new record, rising 11.2% annually in March

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(Kitco News) – Premature inflation peak. The price of gold rose as the US producer price index reached a new record, rising 11.2% annually in March

Gold prices are seeing more bullish momentum as calls for an inflation peak on Tuesday may be premature after producers saw another record rise in price pressures.

On Wednesday, the US Labor Department said its Producer Price Index (PPI) rose 1.4% in March after February’s 0.9% rise. The data was stronger than expected, with economists expecting a 1.1% increase.

Annual inflation rose 11.2%, the report said, another new record for the data set.

The gold market is seeing fresh momentum in the wake of the latest producer inflation data. Gold futures for June were last traded at $1,981.80 an ounce, up 0.28% on the day.

Economists pay close attention to producer prices because they are a leading indicator of consumer prices. Traditionally, companies pass on higher costs to their customers.

Core PPI, which strips out volatile food and energy costs, rose 0.9% last month, after February’s 0.2% rise. Economists had expected to see a rise of 0.5%.

The report said annual core inflation rose 7.0% last month.

According to some economists, the higher-than-expected producer price hike is also not surprising as energy prices and the commodity market saw huge price moves last month as Russia launched its war against Ukraine, dramatically disrupting global supply chains.

More than half of broad-based progress in March was linked to rising energy costs, the report said, with final energy demand rising 5.7%.

Economists noted that higher producer prices will take some time to reach consumers, which could keep inflation pressures high for longer than expected.

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