Gold News

Gold and Silver Prices Jump to 1-Year Highs as Dollar Falls on 'Return to Low Inflation'

GOLD and SILVER PRICES broke to new multi-month highs against a falling Dollar on Thursday as fresh US inflation data said pricing pressures are easing back in the world's largest economy, boosting bets that the Federal Reserve will start cutting interest rates this summer.
After yesterday's Consumer Price Index for March gave a weaker-than-expected headline reading, new figures today said input costs for US producers of good and services fell 0.5% last month from February, pulling 12-month inflation in the Producer Price Index down by more than 2 percentage points to 2.7%, the slowest pace since January 2021.
Western stock markets rose with longer-term bond prices, edging yields further down and reducing both the opportunity cost of owning non-yielding gold and also the funding cost of betting that gold or silver prices will rise in future.
Silver jumped within 5 cents of $26 per ounce, its highest since mid-April last year as the Dollar dropped to 2-month lows against the rest of the world's major currencies.
Gold meantime jumped above $2045 per ounce – its highest since March 2022's spike on Russia invading Ukraine – while the Dollar Index (DXY) dropped towards February's 10-month low beneath 101.
Chart of US Dollar Index (DXY) plus gold prices at 101. Source: BullionVault off Trading Economics
When the Dollar Index crossed up through that level in late 2016 – then a 13-year high – gold traded at $1215 per ounce, rising to $1500 by the Dollar's next rise through 101 in mid-March 2020 and then reaching $1970 at the Dollar's next rise through that level in mid-April 2022.
"We are headed back to a low inflation world, that's the message of the market right now," claims one currency analyst to Reuters.
"The next big trade is that the inflation scare is over."
While betting on next month's Fed decision continues to see a 2-in-3 chance that the US central bank will raise rates again, all but 1.3% of betting on year-end rates sees the Fed then retreating, with a cut to 4.5% or lower now put at a 2-in-3 shot.
Excluding volatile fuel and food items, US producer-price inflation slowed less dramatically last month to 3.4% per year, today's figures said, its slowest since March 2021.
The UK gold price in Pounds per ounce meanwhile rose within 1% of last month's new all-time high of £1648, while the Euro price broke above 1850, less than 1.9% below last month's peak and 2.7% beneath the record high set as Russia began its invasion of Ukraine last spring.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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