Silver rises 2.0% after the release of US factory gate inflation data

• Silver surges higher after release of mixed producer price index data.
• Although the annual numbers came in lower than expected, the monthly data rose.
• US jobless claims released at the same time showed an increase in the number of people filing for benefits.

The price of silver (XAG/USD) is trading higher on Thursday following the release of US “factory gate” inflation, also known as the Producer Price Index (PPI). The precious metal is trading hands at $29.30 after rising more than 2.0% on the day and breaking above the top of a mini-consolidation zone.

The producer price index, which is often seen as a predictor of broader inflation, came in mixed in August, with monthly readings beating – but annual readings falling short of expectations. There were also substantial downward revisions to the July data. The US dollar (USD) sold off following the release, and precious metals such as gold and silver, which are negatively correlated with the USD, rallied.

The producer price index (PPI) ex Food & Energy rose 2.4% in August, the same as 2.4% recorded in July. The result was below expectations of 2.5 percent, according to data from the US Bureau of Labor Statistics (BLS).

Core PPI rose 0.3% this month, compared to a downwardly revised 0.2% decline in July. Economists had expected an increase of 0.2%.

Meanwhile, the headline PPI rose 1.7 percent in August, after a downwardly revised 2.1 percent rise in the previous month. The result was below expectations of 1.8%. On a monthly basis, the PPI rose 0.2%, compared to a downwardly revised 0.0% in July and was above the 0.1% expected.

Employment data released at the same time showed that initial US jobless claims rose by 230,000 in the week ended September 6, beating a revised 228,000 from the previous week and in line with the forecast of 230,000.

Jobless claims further rose to 1.850 million, which was higher than the previous week’s revised 1.845 million, according to the US Labor Department.

While the data sent the US dollar lower, it did not change the outlook for US interest rates. The likelihood of a cut of more than 0.50% at the Federal Reserve’s (Fed) September meeting remained around 13%-15% after the release, according to CME’s FedWatch tool, after falling dramatically on Wednesday after the CPI data.