Gold and silver markets experienced a downturn in early U.S. trading on Thursday, following a U.S. inflation report that exceeded expectations. Both precious metals were already facing selling pressure overnight, with only slight additional losses after the report’s release. The price of gold is trading at $2687.56, down $30.50. The price of silver is trading at $31.27, down 63 cents. The November producer price index (PPI) report showed a 0.4% month-on-month increase, doubling the anticipated 0.2% rise, following October’s 0.2% increase. The core rate, excluding food and energy, met expectations at 0.2%, while the annual headline PPI rose by 3.0%. Surprisingly, the market’s reaction to the higher-than-expected headline PPI was muted.
Despite the hot PPI data, market sentiment suggests the Federal Reserve may still cut rates. Bloomberg reported that Wednesday’s consumer price index (CPI) report is viewed as a green light for a quarter-point rate cut by the Fed next week. However, with inflation remaining above the Fed’s target, the pace of future cuts in 2025 remains uncertain. In global economic developments, Chinese stock indexes closed higher on Thursday, buoyed by promises of further government stimulus and reports of potential yuan weakening. The Chinese currency has depreciated approximately 5% against the U.S. dollar since September. Meanwhile, in Europe, the Swiss National Bank unexpectedly lowered its main interest rate by half a point, moving closer to zero, while the European Central Bank announced a widely anticipated 25 basis-point rate cut.
