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Gold rises as wholesale prices fuel inflation concern

15 June 2013 03:29 (UTC +04:00)

Baku-APA. Gold futures on the COMEX division of the New York Mercantile Exchange futures ended higher Friday to eke out a modest weekly gain, buoyed by data showing a larger-than- expected rise in U.S. wholesale prices in May, APA reports quoting Xinhua.

The most active gold contract for August delivery rose 9.8 dollars, or 0.71 percent, to settle at 1,387.6 dollars per ounce. Gold traded as high as 1,390.4 U.S. dollars after the Labor Department said producer prices made a 0.5 percent monthly rise in May, the first positive reading in three months and exceeding forecasts for a 0.1 percent rise.

Suddenly, investors were talking about inflation on the day and the safe haven appeal of gold was coming back, according to market analysts, as climbing wholesale prices in May increased the appeal of the precious metal as a hedge against inflation.

Some analysts say that the main mover for markets came after the close of floor trading late Thursday, when a report from The Wall Street Journal said that U.S. Federal Reserve Chairman Ben Bernanke next week will try to calm fears that any move to reduce the pace of its bond buying won't mean the Fed is close to ending the program.

Fears that the Fed will begin scaling back its stimulus program have weighed on gold, which had previously benefited from fears that the Fed's aggressive monetary policy efforts would debase the U.S. dollar and boost inflation. Until Thursday, gold had fallen 18 percent this year after some investors lost faith in the metal as a store of value.

Silver for July delivery rose 37.1 cents, or 1.72 percent, to close at 21.954 dollars per ounce.