Gold Moves Sharply Higher As U.S. Dollar Dips

(RTTNews) - After snapping a four-day losing streak in the previous session, the price of gold showed a strong move to the upside during trading on Friday.

Gold for October delivery surged $37 or 1.4 percent to $2,657.60 an ounce after climbing 0.6 percent to $2,620.60 an ounce on Thursday.

The precious metal benefited from modest weakness in the value of the U.S. dollar, with the U.S. dollar index edging down by 0.13 points or 0.1 percent to 102.86.

The sharp increase by the price of gold also came after the Labor Department released a report showing producer prices in the U.S. were unexpectedly unchanged in September.

The Labor Department said its producer price index for final demand came in flat in September after rising by 0.2 percent in August. Economists had expected producer prices to inch up by 0.1 percent.

The report also said the annual rate of growth by producer prices slowed to 1.8 percent in September from an upwardly revised 1.9 percent in August.

Economists had expected the annual rate of producer price growth to dip to 1.6 percent from the 1.7 percent originally reported for the previous month.

The data reinforced optimism the Federal Reserve will continue to lower interest rates in the coming months, although hopes for another 50 basis point cut next month have largely evaporated.

"After an upside surprise from the September CPI report, producer prices came in below expectations and provide support for a 25bps rate cut in November," said Matthew Martin, Senior U.S. Economist at Oxford Economics.