12th May 2017

Gold added $6/ounce in Thursday’s session on the back of a weaker dollar (particularly against the yen) as well as modest declines seen in US equities. The fact that we got relatively bullish inflation readings out of the US early on (as measured by April PPI readings) should have, in theory, helped gold somewhat more than it did. However, while higher inflation is theoretically bullish for the precious metal, it also means that interest rates could be marching higher and so the reading is not as conclusive as the conventional wisdom suggests. The latest inflation numbers show April producer prices increasing by .5%, well above the consensus of .2%. Core producer prices rose .4%, double the consensus. Current probabilities for a June increase by the Fed now stand at roughly 80%, but this latest data, along with the most recent nonfarm payroll numbers, will likely nudge the odds even higher. Separately, the latest US weekly initial jobless claims count came in at 236,000, slightly shy of the 242,000 estimate