After a slight rise yesterday afternoon and last night, gold slumped back down to well below US$1,115/oz early this morning. This Wall Street Journal news report attributes the slump to the rising U.S. dollar. Paradoxically, this decline occurred hours before the most recent wholesale-price inflation data was released. According to the report, the producer price index for finished good was up 1.8%, well above the expected 1.0%. This news drove down stock futures.
As of the time of this post, spot gold has climbed up to $1,123.10. For the first time in more than a week, the price of gold has been driven up by macroeconomic news.
This WSJ column points to unused capacity in the U.S. economy as a reason not to expect a resurgence in inflation anytime soon. Interestingly, capacity utilization was at about 80% when inflation did jack up in 2007-8.
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