Gold prices traded modestly higher after falling -0.37% a day ago, as weakening Treasury yields and a cheaper US Dollar boosted the appeal of the non-interest-bearing metal. China’s producer price index (PPI) surged to 9.0% in May, a level not seen since 2008, also surpassing a baseline forecast of 8.5%. PPI measures the change in prices at the factory gate, thus serving as a leading indicator for the CPI as producers may pass on higher production costs to the end consumers.
China’s official consumer price index (CPI) came in at 1.3% YoY in May, a notable increase from April’s reading of 0.9%, but below market expectation of 1.6%. The slight miss may be attributed to a modest 0.3% rise in food prices as the price of pork tumbled 23.8% from a year ago. Yet, a rapid surge in crude oil, iron ore, base metals and other bulk commodities pushed non-food prices higher. Further price pressure may be seen in the months to come given a significant climb in PPI.
