Gold is showing volatility on Wednesday. The metal pushed to a high of $1289.50, its highest level since October 20. However, the metal has given up these gains in the North American session, after the release of retail sales and CPI. We could continue to see movement from gold, as investors keep a close eye on the tax overhaul bill which is on its way to Congress. If the bill gains steam, we are likely to see the dollar move higher, which could weigh on gold prices.
Although consumer price index numbers remain weak, there was better news from producer price index reports on Wednesday. Core PPI and PPI remained unchanged at 0.4%, beating their estimates. PPI increased at an annualized rate of 2.8%, its fastest gain since February 2012. Inflation levels are being closely monitored by the Federal Reserve, as stronger inflation levels would likely result in a rate hike in early 2018. The markets are very bullish on higher rates, with a December hike priced in at 93% and a January raise priced in at 89%.