Gold News

Silver Falls, Gold Price -1.2% in 30 Minutes as Inflation Keeps Rates Higher for Longer

The SILVER PRICE fell and gold prices tumbled immediately after the 3pm London benchmark auction on Wednesday, dropping to 2-day and 4-session lows respectively as stronger-than-expected UK inflation data followed a wave of 'higher for longer' comments from US Federal Reserve officials on the outlook for interest rates.
Dropping to $31.11 per Troy ounce, the silver price had earlier set a new 12-year high at today's 12 noon benchmark auction, fixing at $32.80 in London after the Shanghai premium reached almost $4 per ounce overnight, a new record incentive for bullion imports into manufacturing giant China.
Gold meanwhile sank $25, dropping through $2400 for the first time since Friday, after fixing around $2408 – down $20 per ounce from Tuesday's fresh London gold price all-time high.
The Bank of England was expecting "quite a drop" in today's CPI inflation rate said Governor Andrew Bailey on Tuesday.
But with a target of 2.0% per year, core inflation in the UK – the world's 6th largest economy – slowed only to 3.9% in April, new figures said Wednesday morning, the slowest since October 2021 but 0.3 points above consensus forecasts. 
For world No.1 economy the USA, "I'm not in a hurry to cut rates," said Atlanta Fed President Raphael Bostic overnight – the unanimous view among 7 officials speaking on Tuesday.
Chart of CME FedWatch forecast for end-2024 US interest rates vs. gold price in Dollars. Source: BullionVault
Fed interest rates will end the year at 4.98% per annum according to today's average forecast in the futures market, around 0.35 points below today's effective Fed Funds rate but 0.10 points higher from the market's view this time last week and 1.3 points above January's rate-slashing consensus.
Gold was then trading $330 per ounce beneath today's 4-session low of $2382.
"In the absence of a significant weakening in the labor market," said Fed Governor Christopher Waller to the Peterson Institute in Washington, "I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy."
"I need to see a few more months of inflation data...coming down," agreed Cleveland Fed President Loretta Mester at an event in Atlanta.
"We're in a period when patience really matters," said Boston Fed President Susan Collins at the same event.
"We need to sit tight where we are for longer than we had previously thought," added Fed Vice Chair of Supervision Michael Barr.
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With gold for US investors losing 1.2% inside 30 minutes this afternoon, the UK gold price in Pounds per ounce hit a 1-week low at £1872.
But gold in Euros held firmer, trading above €2200, as the 20-nation currency hit 1-week lows on the FX market following European Central Bank chief Christine Lagarde saying "there is a strong likelihood" that the ECB will cut interest rates across the 350-million citizen monetary union at its June meeting.
"I'm really confident that we have inflation under control."
Energy and industrial input prices sank harder than precious metals on Wednesday, with copper losing 4.8% from yesterday's fresh New York records as Brent crude oil lost 0.8% towards its cheapest since mid-March.
Longer-term borrowing costs rose in the bond market, with the yield on 10-year UK Gilts leaping 12 basis points to 3-week highs at 4.25% per annum following the surprise inflation data.
Platinum prices held $15 above yesterday's 1-week low of $1032 per Troy ounce, while sister metal palladium – also set for a steep 2024 market deficit of PGM supply vs. demand – slipped to $1000.
Asian and Europe stock markets slipped as borrowing costs rose, while New York's S&P500 index held flat around Tuesday's fresh record closing high ahead of today's much-anticipated quarterly earnings report from AI chipmaker Nvidia (Nasdaq: NVDA).

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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