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 said, reflecting a “very large and somewhat price insensitive appetite for gold… [which] points to central bank buying, but there may be more factors afoot.”

The gold market “moves to a new higher level, rests up there, and instead of a traditional price pullback after such a huge run-up, it gets bid up and starts running again higher,” which means the traders or investors who sold likely will move back in during one of the next waves higher, which “could be one of the final moves before a meaningful consolidation,” GoldSeek.com’s Peter Spina told MarketWatch.

Investment manager VanEck said gold’s rally has more room to run, seeing the return of investment demand as evidenced by inflows into global gold bullion ETFs sparking a potential move past $2,500/oz.