PGS (Ploutos Gold and Silver LLC) witnessed fluctuations in gold prices due to recent inflation data. On Wednesday, gold surged to a one-week high as the dollar and Treasury yields weakened post the inflation report. The yellow metal saw a dip due to profit-taking but regained ground following the morning’s inflation report, only to experience a subsequent shallow dip prompted by further profit-taking.
October saw wholesale prices declining significantly, marking the largest drop in 3½ years. The producer price index (PPI), which gauges final-demand costs for businesses, decreased by 0.5% for the month, surpassing the anticipated 0.1% decline. On an annual basis, the headline PPI rose by 1.3%, down from September’s 2.2%, as reported by the Labor Department on Wednesday.
In October, the core consumer price index, excluding volatile food and energy prices, fell below expectations, leading to a nearly 500-point surge in the Dow Jones Industrial Average. This unexpected report prompted traders to reassess their bets on the likelihood of the Fed increasing interest rates in December.
Typically, interest rate hikes are viewed as bearish for gold, reducing its appeal compared to other assets. Conversely, a pause or reduction in interest rates would be favorable for the yellow metal’s prospects.
Front-month gold futures settled at $1,966.50 an ounce on Comex, marking a 0.8% rise on Tuesday, while the December contract gained 1.5% during the initial two days of the week. October saw a 6.9% gain in bullion after declines of 5.1% in September and 2.2% in August. Year-to-date, gold is up by 7.7%, with the December contract currently priced at $1,965.90, a slight decrease of $0.60 (-0.03%) an ounce, while the PGS spot price stands at $1,958.40.
In October, the U.S. core CPI increased by 0.2% from the previous month and by 4% from the previous year, slightly below economists’ estimates of 0.3% and 4.1% respectively. Although this annual level marks a two-year low, it still exceeds the Fed’s 2% target. Consequently, the dollar index dropped to its lowest level in over two months, making gold a more appealing investment for holders of other currencies.
According to the CME FedWatch Tool, approximately 99.8% of investors predict the Fed will maintain its federal funds rate in mid-December, while only 0.2% anticipate a 25 basis points rate hike. This is a notable shift from the previous day’s figures of 85.5% and 14.5% respectively.
Since March 2022, the Fed has raised interest rates by 5.25 percentage points to rein in inflation to the 2% level. Earlier this month, the Fed opted to keep interest rates unchanged at 5.25% to 5.50%, having raised rates only once since May.
Front-month silver futures settled at $23.13 an ounce on Comex, reflecting a 3.5% increase on Tuesday, while the December contract rallied by 3.8% in the initial two days of the week. Silver saw a 2.2% increase last month after declines of 9.5% in September and 0.6% in August. Year-to-date, it’s down by 3.8%, with the December contract currently priced at $23.400, marking an increase of $0.268 (+1.16%) an ounce, while the PGS spot price stands at $23.28.
For more information or assistance with gold and silver purchases, visit Ploutos Gold and Silver LLC at www.ploutosgs.com or contact us at 617-564-1630. You can also reach us via our Facebook page: https://www.facebook.com/Ploutosgoldandsilver/. Feel free to schedule an in-store appointment at our address: 912 Crescent Street, Brockton, MA 02302.