Gold eases as uncertainty mounts on Fed’s taper timeline after US PPI hits 11-yr peak

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Gold eases as uncertainty mounts on Fed’s taper timeline after US PPI hits 11-yr peak

On Friday, the precious safe-haven spot gold and US gold futures’ prices fell amid growing uncertainty over the US Fed’s tapering timeline of its $120 billion monthly bond repurchase program, as an unprecedented extent of uptick in US Producers Price Index last month had spurred up possibilities of a near-term taper-talk amid sky-scrapping inflation indicators, leading to an increase in US Treasury bond yields while bolstering US Dollar’s safe-haven appetite which in effect had yielded the bullion’s first weekly percentage decline in five.

In point of fact, in the day’s moderate decline in US gold futures’ prices was almost entirely galvanized by an 11-year peak US Producers Prices Index (PPI) in August, indicating that a higher inflation could sustain for a higher-than-anticipated timeframe.

Concomitantly, US Commerce Department said on Friday that US Producers Prices index had raced to an eleven-year peak of an annualized rate of 8.3 per cent over past twelve months through August. However, although, gold has been widely viewed as a hedge against inflation indicators, an increase in US Treasury Yields alongside a stronger US Dollar had dampened the bullion’s appetite.

Gold eases after 11-year peak US PPI data

Citing statistics, in the day’s commodity market wind-down, spot gold sank 0.3 per cent to $1,787.52 per ounce, while US gold futures’ prices pummelled 0.4 per cent to $1,792.10 an ounce.

Over the week, spot gold tumbled as much as 2.11 per cent. Meanwhile, addressing to an 11-year peak US producer price index, a head of commodity strategist at TD Securities, Bart Melek said, “The elevated U.S. producer price index data could on margin drive people to believe that the Fed could show slightly less accommodation down the road with tapering”.