Yesterday CPI effect and today Ryan will explain shortly about PPI effect to XAU/USD (Gold)
The PPI (Producer Price Index) news can have a notable effect on XAU/USD (gold prices):
1. Inflation Expectations: A higher-than-expected PPI indicates rising production costs, suggesting increased inflation. This can lead to higher demand for gold as a hedge against inflation, potentially driving prices up.
2. Dollar Strength: If PPI data prompts the market to anticipate tighter monetary policy (like interest rate hikes), the U.S. dollar may strengthen. A stronger dollar typically puts downward pressure on gold prices.
3. Market Sentiment: Positive economic indicators may shift investor sentiment toward riskier assets, reducing demand for safe-haven gold.
Traders often react quickly to PPI news, so price movements can be volatile around the release.