Gold soars to all-time highs again after US PPI data

Falling US Treasury yields and a declining US dollar have helped to dramatically boost gold prices. In an uncertain environment, mixed signals from labour data and producer inflation support gold. Fed officials’ concerns about inflation strengthen Gold’s appeal as a safe haven, influencing sentiment.

The price of gold recovered its losses from Wednesday and surged above $2,360 on Thursday, ignoring a ferocious data on consumer inflation. Additional information was released earlier in the North American session, indicating that inflation is beginning to moderate according to the Producer Price Index (PPI). As a result, US Treasury yields decreased, ending the US Dollar’s upward trend.

At almost $2,374 per troy ounce, the spot price of XAU/USD is trading at fresh all-time highs, indicating strong gains of 1.70%. Along with initial jobless claims, the US Bureau of Labour Statistics (BLS) released further producer-side inflation statistics. The fact that fewer Americans than expected filed for unemployment benefits suggests that the labour market is still tight.

Fed reps took note of some of the highlights. Both Richmond Fed President Thomas Barkin and New York Fed President John Williams stated that the latest inflation data was unsatisfactory and did not raise hopes that disinflation is becoming more widespread.

The disinflation process is still ongoing, as evidenced by the US Producer Price Index (PPI) for March, which came in below estimates at 0.3% and recorded data at 0.2% MoM. The core PPI came in below predictions and the February reading, printing at 0.2% MoM.

In the year ending in March, the PPI increased by 2.1%, which was higher than February’s 1.6% increase but still below forecasts. Nonetheless, the core PPI was 2.4%, higher than forecasts and data from the prior month.

Initial Jobless Claims fell to 211K from 222K in the week ending April 6, which was less than expected at 215K. This indicates that the labour market is still strong in the wake of the Nonfarm Payrolls report that was released last Friday.

The Consumer Price Index (CPI) report for March indicated high levels of inflation in the United States, which caused investors to reduce their expectations of rate decreases by the Federal Reserve.

The primary reference rate is expected to conclude the year at 4.955%, according to data from the Chicago Board of Trade (CBOT), indicating that futures traders only anticipate two reductions to the fed funds rate.

Even yet, the decline in real and nominal US Treasury yields is hurting the price of gold. Real US yields drop to 2.148%, down three basis points.

Significant gains were also seen in the US Dollar Index (DXY), which rose by more than 1% to a new all-time high of 105.27. According to the World Gold Consortium, the People’s Bank of China increased its reserves by 12 tonnes to 2,257 tonnes in February, making it the biggest purchaser of the yellow metal.

Technically; buyers are eying $2,400. Gold remains upwardly biased despite dipping toward the $2,310 area on Wednesday. Nevertheless, the drop in US real yields sponsored XAU/USD’s last leg up, with buyers threatening to push prices to refresh all-time highs.

The path to testing the psychological $2,400 barrier would be clear if XAU/USD clearly breaks over the $2,365 region. There is potential for more gain at $2,450 and $2,500.

On the other hand, if the precious metal’s price drops below $2,359, look for a challenge of the April 10 low of $2,319, followed by the April 8 daily low of $2,303. Once cleared, the next support would be March’s 21-session high of $2,222. Further losses are seen at $2,200.