Support
Gold hits record high
The US PPI excluding food and energy rose 2.4% year-over-year in August, stable compared to July but below the 2.5% forecast, signaling contained inflationary pressures.
Initial jobless claims for the week ending September 6 rose to 230,000, with continuing claims edging up to 1.85 million
The European Central Bank cut its deposit rate by 25 basis points
Gold surged to an all-time high above $2,550 on Thursday, driven by the release of US inflation data, particularly the Producer Price Index (PPI). The precious metal benefited from a weakening US Dollar, posting this record gain as inflation data pointed to less-than-expected price pressures.
- US PPI Excluding Food & Energy: The year-over-year rise in August was 2.4%, mirroring July's figure, but falling short of the 2.5% forecast. This indicates some inflationary pressures but suggests stability compared to market expectations.
- Monthly PPI Movements: Core PPI increased by 0.3% in August, higher than the anticipated 0.2%, reflecting a slight uptick in inflationary momentum. Meanwhile, headline PPI rose 1.7% year-on-year, below the projected 1.8%.
Jobless Claims Signal Labor Market Softness
Alongside inflation data, US jobs data also hit the market, showing slight upticks in unemployment claims:
- Initial Jobless Claims: 230,000 new claims were filed for the week ending September 6, in line with forecasts, but higher than the revised 228,000 from the previous week.
- Continuing Claims: These edged up to 1.85 million, signaling ongoing labor market softness but remaining within expected bounds.
Silver Rises on Inflation Data
Silver also rallied after the inflation report, breaking out of a consolidation phase and trading above $29.30.
ECB policy
The European Central Bank (ECB) followed through with a 25-basis-point deposit rate cut, as expected. ECB President Christine Lagarde outlined the following points:
- Moderation in Monetary Policy: Lagarde emphasized the need for a gradual reduction in restrictive policies.
- Inflation Outlook: Inflation is expected to rise later this year but will fall to 2% by 2025.
- Labor Market Conditions: Wage growth remains a key focus, though risks of a sudden spike in wages appear minimal. Lagarde also highlighted moderating labor demand and sluggish credit growth.
The mixed signals from inflation and labor market data reflect a cautious market environment, with precious metals like gold and silver benefiting from safe-haven flows while central banks navigate slow economic recovery and inflation moderation.
