Gold resumes rally to record high after softer U.S. inflation reading (NYSEARCA:GLD)

Gold futures resumed their upward climb Thursday after a moderate reading of U.S. producer prices helped calm markets a day after hotter than expected inflation data shook investor confidence in the outlook for Federal Reserve rate cuts.

The Labor Department reported its March producer price index for final demand rose 2.1% Y/Y, the most in 11 months but below the 2.2% analyst consensus estimate.

Meanwhile, data on Wednesday showed U.S. consumer price index rising by a greater than expected 3.5% in the 12 months through March, the highest reading since September.

“PPI data came a bit cooler than expected, and this keeps alive the hopes of possible rate cuts by year-end – as a result gold is up,” High Ridge Futures director of metals trading David Meger told Reuters, adding central bank buying and geopolitical uncertainty remain the “pillars of support” for the gold market.

Front-month Comex gold for April delivery (XAUUSD:CUR) closed +1.1% to a new record high $2,354.80/oz, while front-month April silver (XAGUSD:CUR) settled +0.7% to $28.176/oz, its 11th consecutive daily gain.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (GLDM), (AAAU), (SGOL), (BAR), (OUNZ), (SLV), (PSLV), (SLVP), (SIVR), (SIL), (SILJ)

Gold’s ability to rally despite typical headwinds from rising Treasury yields and a strong dollar may have actually helped support the metal “on some days,” Gold Newsletter editor Brien Lundin told MarketWatch, reflecting a “very large and somewhat price insensitive appetite for gold… [which] points to central bank buying, but there may be more factors afoot.”