Gold Shrugs Off PPI

Crude oil finished on a gain of 95 cents at $71.35 a barrel, a record-high closing level. It earlier rose to a record $71.60.

Concerns that soaring energy costs might eventually seep into core inflation prices have so far not materialized, but gold is also benefiting from its value as a safe haven.

Cliff Droke, a gold analyst and editor of the Durban Deep/XAU Report, says the surge of gold matches up pretty well with his "Global Bombing Index," which tallies the total number of reported bombings worldwide each day since the beginning of 2006.

As of mid-April, there have been 129 reported bombings around the world, with most taking place in the Middle East, Droke writes, citing the BBC.

"With the recent upward surge in bombings around the world it is no surprise that gold recently hit a new high for the year on April 17, nor for that matter that many actively traded gold stocks have benefited from this resurgence of fear and violence," he writes.

Gold bugs argue that the precious-metal's surge is also in anticipation of a slowdown in the U.S. economy, which would lead the Federal Reserve to stop raising interest rates. That, in turn, would lead to a sharp decline in the dollar, a bullish scenario for most dollar-denominated commodities.

Tuesday's release of the minutes of the Fed's late March meeting reinforced that scenario, even if the minutes were released after the close of gold trading on Nymex. Some Fed officials indicated their concerns that monetary policy is at risk of becoming too restrictive.

The minutes, coming on the heels of the tame PPI and the weak housing data, fueled bets that the Fed will call it quits after one more rate hike in May. Odds of another hike in June dropped to 32% from 54% on Monday, according to Miller Tabak.