U.S PPI Sharply Rose in February by 0.4% – March Report

According to the recent producer price index report, which came out today, the
PPI for finished goods sharply increased by 0.4% February compared with January.
This report serves as an indicator for the direction of the U.S core CPI to be
published tomorrow, March 16th. On an annual scale, the PPI increased by 3.3%
during the past 12 months During February the food index edged down by 0.1%,
while the energy index soared by 1.3%. The Producer Price index excluding food
and energy rose by 0.2% during January 2011. This PPI ex food and energy is
estimated to have a lagged negative linear correlation with gold price; i.e. as
the PPI rises, gold price tends to decline the following day. Furthermore, the
PPI excluding food and energy tends to have a positive linear correlation with
silver price. These relations are mainly via the shifts in U.S dollar.