On Monday, the price of gold increased significantly. It went up to more than $2,050 per ounce. This rise marked the third day in a row of increases. The main reason for the gold price going up was the increasing tensions in the Middle East. These tensions made many investors see gold as a safer investment. At the same time, in the United States, there was unexpected news about producer inflation. Instead of increasing as many people expected, producer inflation actually decreased. This decrease led many investors to think that the U.S. Federal Reserve might lower interest rates sooner than they had previously planned.
Earlier in the week, there were significant military actions in Yemen. Forces from the United States and Britain attacked targets belonging to the Houthi group. Their goal was to stop the Houthis from attacking ships in the Red Sea. In response to these attacks, on Sunday, the Houthi militia threatened to respond strongly and effectively against the United States.
In another development in the United States, the data for the Producer Price Index (PPI) for December showed an unexpected drop. The PPI decreased by 0.1% from the month before. This decrease surprised many experts who had predicted an increase of 0.1%. This unexpected drop in the PPI was in stark contrast to the recent high results of the Consumer Price Index (CPI). The new PPI data sparked hope among many people. They began to think that inflation in the U.S. might start moving towards the target levels set by the Federal Reserve.