Gold in Check After PPI

Bullion is up $1.20 at $653.90 an ounce.
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Precious-metals prices were seesawing Thursday after the release of new government statistics on wholesale price inflation.

Benchmark contracts for gold bullion were ahead by $1.20 at $653.90 an ounce, while silver was rising 3 cents at $13.09 an ounce in recent New York trading action.

The bullion exchange-traded funds that own bars of the precious metals,

iShares Comex Gold Trust

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iShares Silver Trust

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, were both up 0.2% lately.

The Labor Department says the prices of goods at the wholesale level grew a higher-than-expected 0.9% in May, ahead of the consensus forecast of 0.6%. But when the volatile food and energy components were stripped out, the so-called core rate grew only 0.2%, in line with analyst expectations.

The discrepancy between the core and headline rates was largely caused by a 4.1% jump in energy prices during the period.


The report underscores the ability and willingness for producers to absorb temporary, albeit dramatic, swings in relative energy prices into profit margins," writes Kenneth Beauchemin, an economist at Global Insight.

More simply, he says jumps in prices are eating into company profit margins rather than showing up as inflation in the form of rising prices for goods.

Still, the data was a concern to gold investors, especially those who buy the metal as an inflation hedge. Bullion is believed by some to hold its real value, or purchasing power, over long periods of time relative to paper assets, which are devalued by rising consumer prices.

As for base metals, copper prices were rallying 5 cents at $3.37 a pound.

Freeport-McMoRan Copper & Gold

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CEO Richard Adkerson told attendees at a conference that his company was considering selling some of its assets to help pay down the debt incurred when it bought rival miner Phelps Dodge earlier this year,


reported after the market close Wednesday.

The stock was gaining 3%.

Elsewhere, Matrix Research upped its rating on shares of

Titanium Metals


to buy from hold, sending the stock up 3.6%.