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Gold Gains as Wholesale Prices Fuel Inflation Cconcern

June 14 (Bloomberg) -- Gold futures rose as a U.S. government report showed wholesale prices climbed in May for the first time in three months, increasing the appeal of the precious metal as a hedge against inflation.

The producer-price index rose 0.5 percent after falling 0.7 percent in April, which was the biggest drop in more than three years, Labor Department data showed. The median estimate in a Bloomberg survey projected the measure would gain 0.1 percent. Gold has plunged 17 percent this year after some investors lost faith in the metal as a store of value, while consumer costs rose the least in five decades.

“Suddenly, people are talking about inflation,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Today, the safe-haven appeal is back.”

Gold futures for August delivery gained 0.7 percent to settle at $1,387.60 an ounce at 1:41 p.m. on Comex in New York. Trading was 47 percent below the 100-day average for this time, according to data compiled by Bloomberg.

Yesterday, assets in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, declined 6.3 metric tons to 1,003.53 tons, the lowest since February 2009.

Newcrest Mining Ltd., Australia’s largest gold producer, said last week it will write down the value of its assets by as much as A$6 billion ($5.8 billion) after the slump in prices.

Silver futures for July delivery rose 1.7 percent to $21.954 an ounce, the biggest gain in more than a week.

The precious metal has plunged 27 percent this year, the worst performer among the Standard & Poor’s GSCI index of 24 raw materials.

On the New York Mercantile Exchange, platinum futures for July delivery climbed less than 0.1 percent to $1,447.40 an ounce. Prices are down 6.2 percent this year

Palladium futures for September delivery advanced 0.1 percent to $731.70 an ounce, helping extend the year’s gain to 4 percent.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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