Gold prices plunged lower despite U.S. producer price index (PPI) data showing a strong reading in November, driven by falls by investor vigilance ahead of the FOMC meeting.
U.S. producer prices, which were initially forecast to decline to 0.5% from 0.6%, displayed a higher increase to 0.8% last month. On an annual basis, the PPI rose to its highest level since 2011 at 9.6%, stronger than market expectations for a 9.2%increase.
As soon as the data was published on the New York session, gold price fell sharply to a low of $ 1,766 per ounce before re -trading around $ 1,772 per ounce in the Asian session today.
Gold typically benefits from strong inflation data as it is considered an inflation hedge, but in this context the yellow metal suffers losses following expectations of policy tightening by the Federal Reserve (Fed).
The encouraging reading of the data has further boosted market confidence for the Fed to accelerate the reduction of its asset purchases and pave the way for an earlier -than -expected interest rate hike.
High PPI data also drove a surge in US dollar trade, causing the precious metal gold to fall lower.
