Gold prices rebounded on Tuesday, climbing nearly 0.8% and pushing past the $2,350 threshold after the previous day's steep decline. This upward movement was fueled by a weaker U.S. dollar and subdued Treasury yields in the wake of the release of the latest batch of U.S. producer price index (PPI) information, which ultimately failed to ignite significant volatility.
While April's PPI figures topped estimates, a downward revision from the previous month softened the impact. In addition, traders were reassured that the gains were primarily driven by portfolio management services, a sector with limited influence on the broader economy. Importantly, many PPI components that feed into the core PCE deflator saw only modest increases, suggesting that the disinflationary trend is not entirely dead.
While April's PPI figures topped estimates, a downward revision from the previous month softened the impact. In addition, traders were reassured that the gains were primarily driven by portfolio management services, a sector with limited influence on the broader economy. Importantly, many PPI components that feed into the core PCE deflator saw only modest increases, suggesting that the disinflationary trend is not entirely dead.