Gold Firms as Wholesale Prices Rise in October, Less than Expected, as Inflation Eases

Wholesale prices grew less than expected in October according to a report Tuesday from the Bureau of Labor Statistics.

The producer price index, a measure of the prices that companies get for finished goods in the marketplace rose 0.2% for the month, against the Dow Jones estimates for a 0.4% increase.

On a year over year basis, PPI rose 8% compared to an 8.4% increase in September and off the all-time peak of 11.7% hit in March.

Excluding food, energy and trader services, the index also rose 0.2% on the month and 5.4% on the year. Excluding just food and energy, the index was flat on the month and up 6.7% on the year.

NY Fed’s Empire State Manufacturing Index Rebounds More than Expected

Manufacturing activity in New York State rose more than expected in November as shipments picked up and factory employment continued to grow steadily, the New York Federal Reserve said on Tuesday.

The Empire State Manufacturing Survey’s general business conditions index increased to 4.5, up from -9.1 in October. This was much better than the -6.1 consensus forecast from economists polled by The Wall Street Journal.

The indicator, which is based on a survey of manufacturing firms in the New York area, signals factory activity fell at a slower pace compared with the previous month.

Market Reaction

Treasury yields fell sharply on the news, driving the U.S. Dollar lower against a basket of major currencies. This help boost demand for dollar-denominated commodities such as gold and crude oil.

Higher risk assets also rallied on the PPI news, sending the benchmark S&P 500 Index to a new multi-month high along with the blue chip Dow Jones Industrial Average and the tech-weighted NASDAQ Composite.