Gold rally pauses ahead of United States inflation data

BLGCRTV

While investors cheered an increase in the US producer price index (PPI) for last month, inflation concerns were still in focus ahead of consumer price index (CPI) data on Friday after Federal Reserve minutes showed a more guarded view.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in September after edging up by 0.2 percent in August.

The closely watched core CPI was up only 0.1%, leaving the annnual rate of inflation at only 1.7%.

"In general the idea of lower inflation puts in people's minds that the Fed will go more slowly".

Minutes from the Federal Reserve's September meeting released on Wednesday showed policymakers had a prolonged debate about the prospects of a pickup in inflation and the path of future interest rate rises if it did not.

The Russian central bank is considering buying gold on the Moscow Exchange, First Deputy Governor Ksenia Yudayeva said, TASS state news agency said, confirming an earlier report by Reuters.

Gasoline prices surged 13.1 percent last month because of the supply chain interruption caused by Hurricane Harvey, accounting for 75 percent of the rise in the CPI.

Excluding food and energy prices, core producer prices still rose by 0.4 percent in September after inching up by 0.1 percent in August. Sterling was last trading at $1.3261, up 0.30 percent on the day. The energy index rose 10.1% in the last twelve months.

"Many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent", said the Minutes of the Fed's September 19-20 meeting published on Wednesday.

"With a December rate hike nearly fully priced in by now, however, investors are starting to focus on the Fed's still cautious forward guidance and hence the limited scope for a further increase of the dollar's rate advantage".

Still Fed officials will have several more inflation reports to review before making a December decision. But that hasn't fully translated directly into higher USA consumer prices, in part because technology is allowing Americans to find lower-cost products and wage pressures remain largely in check.

After four straight days of declines, the dollar index, tracking the greenback against a basket of major currencies, rose 0.07 percent. Shelter prices advanced 0.3% over the month.

US crude rose 1.52 percent to $51.37 per barrel and Brent was last at $57.16, up 1.62 percent.

In a separate report, the Commerce Department said retail sales jumped 1.6 per cent in September. Average weekly earnings, adjusted for inflation, fell 0.1% in September from a month earlier.

Sarah Chaney contributed to this article.

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